Two million couples face costs if they split

Unmarried couples who live together are increasingly putting legal protections in place which dictate how their money will be divided if they split up.

Applications for so-called “cohabitation agreements” – the equivalent of a “prenup” for unmarried partners – have risen by a fifth over the past 12 months, according to lawyers surveyed by the insurers Direct Line.

There are 3.5 million unmarried couples living together, according to the Office for National Statistics, as it becomes commonplace to buy a home or have children before marriage, or eschew wedlock altogether. Cohabiting couples were the fastest-growing family type of the past decade, while at the same time marriage declined.

However, two million of these couples are living together without legal safeguards, leading experts to warn that the result could be costly.

Chloe Couper, of Direct Line, said:

“It is important unmarried couples realise they have very little legal protection if they move in together and take on joint financial responsibilities, without a cohabitation agreement detailing how assets and liabilities like bills are to be dealt with if they split. “A cohabitation agreement can prevent lengthy and expensive court proceedings and additional emotional stress after a break-up.” Shona Lowe of financial planners 1825 said more people would be cohabiting due to lockdown, with many of them unaware of the risks. “Couples who weren’t previously living together are now under one roof and people have been forced to put weddings on hold,” she said. “But the reality is the rules around the distribution of our assets after a break-up have not kept pace with the increasing prevalence of cohabitation.” Those without agreements in place have limited rights if they split with

The 12-month rise in the number of unmarried couples putting safeguards in place, according to law firms their partner, and there is unlikely to be any legal obligation to divide assets.

This can prove to be problematic if an individual moves into their partner’s home and contributes to the mortgage, for example. In the event of a break-up they would have no legal claim to any equity in the property if it is owned solely in their partner’s name.

An ex-partner may be able to continue living in a property or secure a share of its value when sold, but only if they can prove to a court they paid towards home improvements or mortgage payments. There is no guarantee a share would be awarded in England and Wales, with disputes resolved case by case. In Scotland individuals can apply to the courts for occupancy rights, but these may not be granted.

A disgruntled partner who owns a property in their sole name has the right to evict their partner without a court order. There is also no requirement for them to ask for permission to take a loan out against the property, or to get the other person’s agreement before selling it.