Breaking up is hard to do
Some separated partners stuck in a house together are even hoping the election means they can finally sell and move on from a failed marriage, writes Jonah Franke.
With house prices falling and separations a phenomenon as old as time itself, the worst time for your wallet to break up is now.
Hamilton-based mortgage broker and director of Total Mortgages, Jordan Cameron, says he has seen a ‘‘massive influx’’ of separating couples through his doors who are looking to remortgage or buy the other half of the couple out, all while attempting to cut their losses as much as possible.
‘‘I’m not entirely sure what is causing that [influx], maybe it’s the interest rates going up? We definitely have noticed it.’’
The median house price in Hamilton has fallen for the 17th straight month, according to QV House Price Index data.
Couples who purchased joint property during the period risk making a loss when selling, or paying more when remortgaging because of higher interest rates, Cameron says.
The range of options for couples looking to divide shared assets is varied, but economic realities often dictate what couples do.
‘‘It’s really case by case. There’s always one couple who is more keen to buy the other out if they can. It kind of depends on how many properties they have. What their debt servicing is like. With interest rates quite high at the moment it is quite hard to qualify for lending on a single income,’’ Cameron says.
He tells of a couple he assisted who had a rental and an owner occupied property who were able to retain a property each. Another wasn’t so fortunate. ‘‘We had another couple who unfortunately couldn’t qualify on their own, so they’ve had to sell the property. We are getting a bit of that.’’
While divorce hearings are rare and the court has a method of deciding who gets how much, Cameron says ultimately the value of the properties he sees are determined by compromise.
‘‘How agreeable each party is on the property’s value.
‘‘In most instances we advise them to get an independent real estate agent through each to do an appraisal . . . If they can’t agree on that figure, we’d get a registered valuation done. That’s about another $900, but there’s no disputing that.’’
On other occasions the bank might have the final say about the value of the house and who is eligible to claim what.
‘‘If it is really, really tight, close to LVR [loan to value ratio] of 80%, and the bank aren’t comfortable with an e-value on the property they might require a registered valuation anyway,’’ he says.
Some forbearing customers with greater concern for their wallets than their relationship, are also arranging to postpone the sale of their shared property until the market improves, Cameron said.
‘‘We have had a couple of people try and make a sort of handshake deal: ‘I’ll pay you out X amount of dollars, but we’ll keep the house in both names for now’.’’
Emma Miles, a Hamilton barrister and specialist in the law pertaining to separation and property, says that the clients she assists are often finding sly ways to ensure financial stability.
‘‘Something I’m seeing is sometimes one of the parties doesn’t want to sell, and the other does. So what they’re doing is sitting the house for longer hoping that the price will fall.
‘‘They are sitting on the house to prevent sale, or they want to purchase it at a lot lower cost. So the general feeling amongst people is that house prices are going to continue to fall.’’ The reason for the increase in clients Cameron is seeing, Lodge real estate agent Leah Gordon thinks, is the pressure of the Covid period coming to an end.
‘‘Could be Covid a bit. But we always see an upswing in February/ March of these types of sale.’’
Concretised in out of court settlements, some separating couples are turning to property sharing agreements, Miles says. Arrangements in which one party pays the expenses for the house, while the other is resident, for instance, are not uncommon, Miles says.
Auctions are becoming the go-to option for couples who cannot decide on a sale price for their shared property, she adds. That way the market is left to determine the price on their behalf.
Gordon’s colleague and former family lawyer Paul Conway says while he is not seeing more separating customers looking to sell, those who are selling are making bigger losses. He, too, has been privy to an auction after a separation.
‘‘A good example I had was a mortgagee auction last December out in Flagstaff. Just the fact it was a mortgagee sale had people coming through the door in droves . . . the chance you’re going to get a bargain.’’
Miles says that with October’s election impending, some couples are holding off selling their shared property to wait and see if it yields a party friendly to the property market. Couples in that situation are resorting to ‘‘pre-separation agreements’’ in which the terms of any possible agreement made in the future are made patent.
Until then, it could be best to keep politics out of the bedroom.