February may be the month of love, but it’s important to be aware of the risks and implications when buying a house with your partner. It’s a very exciting time in your lives, but home ownership is also a large commitment - so it’s vital to have some important conversations at the outset before you begin your house search.
Firstly, you’ll need to consider the upfront costs of buying a home - for example, how will the deposit be paid and split? If one person is contributing more than the other, it may be worth getting something in writing to prevent any disagreements or arguments further down the line. While we don’t like to ever think of anything going wrong, unfortunately, it can happen, so you’ll need to be prepared and protected.
There are also the ongoing running costs of a home to consider, such as mortgage payments, bills and even the weekly food shop. While it may seem obvious to just opt for the simple 50/50 split option, this may prove difficult if one of you earns significantly less than the other.
By getting these difficult but essential conversations out of the way early, you’ll then be able to concentrate on the much more exciting part - looking for and viewing houses!
Solicitors can prepare a ‘Deed of Trust’ document, which sets out exactly what will happen to any equity if the property is sold. This helps to provide clarity to both of you from the outset and is commonly used when two people purchase a house but contribute different amounts towards the purchase price.
It’s also important to be aware that while a joint mortgage can just be paid by one person, both of you are liable for the debt if anything were to happen.
In a situation where one of you owns the property, and the other partner lives there as a non-owner, they may develop a right to a share in the property if they are contributing to any upfront or ongoing costs, such as mortgage payments or even works to the property. Cohabitation agreements are ideal to set out all arrangements for finances, property and children for any unmarried couples living together to protect both individuals and their offspring.
When buying a house, there are two types of co-ownership available - either ‘joint tenants’ or ‘tenants in common’.
If you opt to be joint tenants, this means that you will own the property equally, with the financial obligations and benefits shared equally too. If one of you were to pass away, their share would automatically pass to the other - known as ‘the rule of survivorship.’
If you sell the home, it is presumed that both of you own the property equally, regardless of previous contributions. This option tends to be most used by those who are married or in a civil partnership.
‘Tenants in common’ allows both of you to own a separate, proportionate share of the property. Here at Wilkin Chapman, we’d advise that this is supported by a Will, as the rule of survivorship does not apply. This option is favourable when there are unequal contributions to the deposit, or if either of you have children from a previous relationship(s).
It’s worth noting that if you’re married or in a civil partnership, or subsequently get married or enter a civil partnership, then matrimonial and civil partnership laws take precedence over other documentation.
A family court will consider the existence of any documents such as a Deed of Trust but will not necessarily abide by it. As old-fashioned as it may seem, unmarried couples are not protected in the same way that married couples and civil partners are by law.
If you’re looking to buy a house with your partner, then we wish you the best of luck and happiness in your journey to your new home. Just make sure that you’re fully protected and aware of the law to avoid any unfortunate situations down the line.