What to Consider when Buying a House with a Partner

Year Published: 2020

With stamp duty abolished until March 2021 for properties up to £500,000, couples buying a house together for the first time are on the rise as they take advantage of the saving. Additionally, lockdown may have given those couples who did not live together before the chance to try living together, cementing their decision to now buy.

If you are thinking of buying a house with your partner and you are not married, there are a few things to consider.

A Declaration of Trust

A declaration of trust is beneficial if one party is contributing more towards the deposit than the other. For instance, if one party is utilising inheritance or significant savings built up over a number of years then it may be useful to protect this investment should the relationship break down in the future. The deed will serve as evidence of your intentions upon purchase and the sale proceeds will be divided as per the deed.

For example:

Max and Lucy are first time buyers. Max has £30,000 inheritance from his grandfather’s Will which he will be putting towards the deposit. Max and Lucy will both jointly contribute towards the mortgage and bills.

In this case the declaration of trust will be worded to say that when the house is sold Max will receive the first £30,000 and the remainder will be divided equally.

If there wasn’t a declaration of trust then the general position is that the equity should be divided equally between them, unless agreement could be reached as to unequal division.

A Cohabitation Agreement

A cohabitation agreement is an agreement signed by both parties and can cover what is to happen upon separation.

The cohabitation agreement can cover a number of things such as (but not limited to):

  • How equity is to be divided
  • How long after separation the property is to be put on the market for sale
  • How joint bank accounts are to be dealt with
  • How other assets are to be divided such as cars or certain pieces of furniture

The cohabitation agreement can be bespoke to your particular relationship and again acts as evidence of your discussions and intentions upon purchase. This will help to prevent a dispute upon separation.

Why Do We Need These Documents when Buying a House with a Partner?

Unfortunately, we have become involved in several cohabitee disputes where an agreement could not be reached as to what is to happen to the property or how the equity is to be divided. If agreement cannot be reached then we often have to refer the matter to court to determine what is to happen to the property. This is an expensive and lengthy process which can be easily avoided with a declaration of trust and/or cohabitation agreement in place from the outset. We understand that it seems unromantic to have discussions about separation when buying your first home which is why many couples don’t have these discussions. However, utilising early legal advice can potentially prevent a stressful and expensive dispute that you may have not foreseen in the future.

If you are considering buying a house with a partner and would like to discuss cohabitation agreements or protecting your investment into your first home please contact Zoe Worthington, Solicitor, on 0161 475 1234 or email [email protected]

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