As the cost-of-living crisis continues to have an impact, the housing crisis in the UK has become a major focus in the media. The market is experiencing record high mortgage rates, leading to challenges for divorcing couples, as well as soaring rental prices and a shortage of housing.
These issues are significantly affecting divorcing couples across the country.
Housing is often a contentious issue in divorce proceedings, as couples struggle with the decision of whether to keep the family home and, if they do, who gets to live in it. The rising mortgage rates have made the decision about the marital property increasingly difficult.
What happens to the home in divorce?
Typically, divorcing couples have three options when it comes to property. The first is to sell the house, pay off any remaining mortgage, and divide the equity. This money can be used to purchase a new house or rent a property.
The second option is for both partners to keep the family home and the mortgage in both of their names. They both agree to sell the property at a later date, such as when their youngest child turns 18.
Finally, in some divorces, one party will buy out the other’s interest in the house and transfer ownership solely into their name.
If the decision is made to sell the marital home, the equity is divided based on various factors, including each party’s borrowing capacity.
However, being able to afford two separate properties is not always feasible, particularly in the current climate.
If an agreement cannot be reached with the ex-spouse regarding the marital property, court intervention may be necessary. While the court’s starting point is a 50/50 split of the assets, the decision is based on fairness, considering the needs of each party, their future earning capacity, and the wellbeing of any children.
For those who are turning to renting, concerns about no-fault evictions are prevalent. The government has once again postponed the Renters (Reform) Bill, which would enhance security for renters by imposing restrictions and obligations on private landlords, preventing them from evicting tenants without evidence under Section 21 of the Housing Act.
What options are there?
The housing crisis is making property decisions increasingly challenging. Combined with the impact of the cost-of-living crisis, divorcing couples are being pushed to explore alternative solutions.
Birdnesting is one such avenue. In this arrangement, the children remain in the family home, and their parents rotate in and out of the house. Each parent spends a set amount of time in the house, based on the child arrangement agreement.
However, this means that they will also need separate living arrangements, and many turn to friends or family as a temporary solution.
However, this is not always feasible. As the housing crisis persists, it is likely that more divorcing couples will come up with creative solutions to address housing issues.
It is crucial to discuss all available options with a lawyer. Once full financial disclosure has been made, negotiations can begin to determine what the marital pot will allow.
Useful Links
Property in Divorce – what you need to know
How to financially plan for your divorce: Watch on YouTube
Top 3 Financial Considerations
Budgeting Solo in the Cost of Living Crisis: Watch on YouTube
Can I afford to divorce my partner?
Dangers of a DIY Divorce: Listen on Spotify
Taking control of your finances on separation and beyond: Listen on Spotify