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 now 3.5 million unmarried couples living together, according to the Office for National Statistics, as it becomes more 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 has declined.
However, two million of these couples are living together without these legal safeguards in place, 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 in place 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.”
Those without agreements in place have limited rights if they split with their partner and there is unlikely to be any legal obligation to pool or divide assets.
This can prove to be particularly problematic if an individual moves into their partner’s home and contributes to the mortgage, for example, as in the event of a breakup 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 will be awarded in England and Wales, with disputes resolved case by case. In Scotland individuals can apply to the courts for occupancy rights, but again there is no guarantee it will 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 sell it without the other person’s agreement.