Why buying property jointly with your spouse is risky

·3 min read
property A man walks past houses painted in various colours in a residential street in London, Britain, May 15, 2019. REUTERS/Toby Melville
Most buyers assumed wrongly that because they went into the property 50/50, they would automatically receive their fair share. Photo: Toby Melville/Reuters

UK property owners are opening themselves up to losing tens of thousands of their money should they split with their partner as most are not financially protecting their share in the home.

More than a quarter (27%) of those who bought a home and then split up claim they lost out as proceeds of the sale were not split fairly, according to research from Zoopla.

Of those, seven in ten (72%) said that their partner received more than their fair share – or that they were not treated fairly. The rest (28%) actually admitted that they got more than they rightfully deserved.

“Buying a home with your partner is incredibly exciting, but the reality is that break-ups do happen. It’s incredibly important that anyone making this commitment protects their investment. Otherwise, they potentially risk major financial losses in the future. People may assume they’ll come to an amicable agreement, but anyone who’s experienced a messy break-up will know that fairness and reason often go out of the window,” Daniel Copley, consumer expert at Zoopla, said.

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Most buyers (44%) assumed that because they went into the property 50/50, they would automatically receive their fair share. But this isn’t the case – especially if marriage or kids are involved.

“If you are putting more into the deposit, you could be particularly at risk, as if your partner is contributing to mortgage payments, they could be entitled to half the home. Key conversations to have with your partner when buying a home are how you plan to split the deposit and mortgage (and ensuring this is reflected in proportion of ownership), if you’ll split maintenance costs in line with this, as well as other key finance questions such as if you have any debts,” he added.

In the event of a break-up, most people will be reliant on getting their property investment back to finance their future living arrangements. Around 37% say that they had no personal savings whatsoever when they split up with their partner – rising to a 46% for women.

Despite this, just 15% say they took out a deed of trust or cohabitation agreement to protect their share, and only 10% had a floating deed or commensurate share deed. Meanwhile, only 7% had a property break-up plan clarified as part of a prenuptial agreement.

“Money is always an awkward conversation to have. However, couples often end up arguing about finances because they don’t have a clear plan. It’s important to separate your feelings in your relationship from sensible, personal financial planning,” behavioural psychologist Jo Hemmings, said.

One in ten (10%) admitted tackling potential break-up conversations when buying a home was just too awkward to handle, saying it didn’t feel right however, couples should be prepared for this to happen.

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“These conversations rarely happen unless you make a point of it, so schedule in a quiet time to have a transparent conversation about finances, such as who will pay for what and whether paying 50/50 is fair based on your earnings. And most importantly, what would happen with your stake in the property if you split up. Having made key decisions regarding your finances, you will be in a much better place to get on with all the lovely parts of your relationship. And you’ll be ahead of the game in couple goals, as you’re now much less likely to argue about money – the number one issue couples row about,” she added.

The average first-time buyer deposit now stands at £59,000.

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