The introduction of the no fault divorce in April 2022 made it easier for couples to instigate divorce proceedings without having to find reasons of where to lay the blame.
But protecting interests in the property amid divorce remains complex – especially if dependent children are involved.
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Property, divorce and what to do first
“Property is usually the largest asset in a divorce, yet it’s often treated as something to ‘get out of the way’ quickly when it deserves strategic thinking,” Michelle Niziol, chief executive of mortgage brokerage and estate agency IMS Property Group, said.
“My advice is to pause, take stock, and fully understand your financial situation before agreeing to any property decisions.”
What to do in the early days of separation:
- Collect key financial documents including mortgage statements, bank accounts, credit cards, pensions, loans and insurance.
- Check who legally owns the home and how.
- Open your own bank account if you do not already have one.
- Before relations become too strained, make sure you know the log in details and passwords for all shared financial information.
- Get at least one independent valuation of the property.
- Create a simple financial snapshot that covers income, outgoings, debts and the cost of living by yourself.
Work through this list before instructing a solicitor, or during, but keep in mind that having this information upfront will save you time and money.
If you’re struggling to complete any of these steps, outline them to your solicitor who can help and guide you.
Property and divorce: Legal ownership versus entitlement
If you’re unsure who owns the property, the best place to start is by checking the title documents also known as the official copies of the land register. These are sent to you by your solicitor when you buy a property but you can also order them from the Land Registry online for £24.95.
What your title deeds may say:
- One spouse is the sole owner.
- The property is jointly owned by both spouses.
- Spouses own the property as tenants in common.
Joint owners each own the whole property together which means neither one owns more of the property than the other. When one spouse dies, the property becomes wholly owned by the other.
In the case of tenants in common, a husband and wife, for example, have decided to define the share each has and who they wish this share to pass to when they die.
However, when it comes to divorce proceedings, the judge isn’t just looking at whose name is on the house deeds, they consider who is entitled to benefit from the property and its value. For example, you may not be named as a legal owner but you may have lived in the property as a married couple for 20 years, raised your children there and contributed to home improvements and household bills.
Mark Heppinstall, family law partner at law firm Freeths, said: “The question of who is beneficially entitled to a share in property is entirely different to legal ownership.
“Legal ownership is the starting point, but under the Matrimonial Causes Act 1973 the court has a very wide discretion to make orders that can change how spouses benefit from any property they own.”
This could result in a court order to transfer the property into one party’s name or that the home must be sold.
Understanding what you can afford
Couples may have strong emotions over who gets the house and who should leave but in the end, it may come down to affordability.
Niziol said: “Securing the family home might feel like the safest option but it isn't always the best route. Understanding your mortgage options early brings clarity on what’s realistically affordable on a single income, allowing confident property decisions that support long-term security.”
Divorcing couples should seek advice from a mortgage specialist who can offer a divorce specific affordability assessment that models three possible property divorce routes to see which decisions are sustainable in real life.
The assessment must happen before a settlement is reached otherwise you might wind up agreeing to an arrangement you later find out you can’t afford.
Route 1: Staying put
One spouse stays in the property because selling or buying out straight away isn’t affordable or practical. The couple remain financially tied to each other and jointly responsible for the mortgage.
Often a route chosen to provide short-term stability, you risk being exposed to each other financially until a long-term decision is made. If communications break down over who is paying what share of the mortgage, for example, this could damage both parties’ credit ratings affecting future borrowing power.
It can also impede the partner who has left the property from getting another mortgage while they are tied to the loan on the family home.
Route 2: Selling up
The property is sold and the proceeds of the sale are split in conjunction with the court’s ruling to fund a future house purchase.
You may also agree a deferred sale agreement also known as a Mesher agreement. A deferred sale may be agreed because a stable home is needed to bring up the children but there are no other assets to give to the parent leaving the home.
Instead, they are given a percentage share of the value of the property to be paid at a certain future time, when the youngest child finishes education for instance, or when triggered by an event such as the remarriage of the person who remained in the house.
Route 3: Buying out
Buying out refers to one half of the couple giving the other money to relinquish their share of the property. In most cases, this person buying out the other will need to remortgage the house to raise the money to hand over. A solicitor will then update the title deeds of the property to remove or add an owner.
The legal ownership might also change through a Property Adjustment Order issued by the court which states that the home should change from joint to sole ownership or from one spouse to another. Money doesn’t always change hands in this case. It is arranged through a legal process called a Transfer of Equity by a solicitor.
In both cases, the mortgage lender must agree and before it does, it will assess the new owner’s income to make sure they can afford the mortgage by themselves.
Common mistakes made by divorcing couples
Failing to understand the viable options
“I’ve seen couples assuming a transfer of property before properly stress testing affordability,” says Heppinstall, from law firm Freeths. “They have negotiated an agreement based on a transfer of property only then to have the mortgage lender refuse to release one party from their mortgage contract.”
Other pitfalls include offering to buy out your partner by remortgaging the house to raise the funds before checking if your bank will lend you the money.
Leaving yourself exposed to future claims
A Financial Remedy Order or Consent Order is a legal document that makes the financial split final and enforceable. Without one of these you are leaving the door open to future claims which may emerge years down the line.
Once it has been decided how the assets will be divided, make sure your solicitor has drawn up this agreement and had it approved by the judge. It will only then become legally binding and final.
Not obtaining an independent valuation
“Don’t assume a valuation based on houses that have sold nearby or by using online valuation services that can be widely inaccurate,” said Niziol, from IMS Property Group.
Instruct an independent valuation to avoid undervaluing your home and walking away with a significantly less than fair share.
Triggering early repayment charges
If you decide to remortgage to raise funds to buy out your partner but forget to check when your mortgage deal expires, you could wind up paying thousands of pounds in fees to exit early. Ask your adviser to check when your deal expires. It may be worth the wait.
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