Cohabiting couples and the financial risks they take

Couples who live together without tying the knot can find themselves in a financial tangle


George Sprague

George Sprague

Principal Associate

Mills & Reeve

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Cohabiting couples are the fastest-growing family type in the UK, but a YouGov survey of more than 1,000 such couples across England, commissioned by Mills & Reeve and carried out in 2017, highlighted a sobering truth. Many people who aren’t married but live with their partners do not properly understand their legal position, and have no idea what rights they would have on separation.

‘Common-law marriage’ for cohabitants has not existed for centuries. Cohabiting couples do not have the same rights as married couples, and courts do not have the powers to reallocate assets as they can on divorce. Despite this reality, more than one third of cohabitants surveyed either believed they had the same rights as married couples or said they didn’t know.

People often believe that they are protected when they own property, assuming that the law provides a ‘fair remedy’ if a cohabiting relationship ends. However, there is no such thing as a common-law spouse – legally, you are either married to your partner or you are not – and the outcome for those who are not married can often feel very unfair indeed.

Home sweet home

Most cohabitation disputes are about property. Often couples don’t contribute equally to the mortgage deposit or when splitting monthly bills. These arrangements may work when couples are together, but if the relationship breaks down, disputes often arise over how the property is divided. This is particularly true of couples who own their home as joint tenants, as the majority do.

In the case of couples who live together in a property owned solely by one of them, the non-owner would have to apply to a court for a ruling that they have an interest in the property on separation, and they could even be forced to leave the property by the owning party.

And the situation can have impacts that go beyond the couple to their wider family. Take a situation in which a young woman buys a run-down property to renovate with her boyfriend. They put the house in joint names, as joint tenants. She borrows money from her grandparents for the deposit and from her parents for renovation work, on the understanding that it will be repaid but with nothing in writing. However, if the relationship ends and the boyfriend – having made no capital contribution to the property – demands 50% of the equity, the family’s investments are unprotected and, in all likelihood, the now-ex boyfriend would receive half of the full value of the property.

Power play

On separation, cohabitants – unlike married couples – also have no rights to financial support or to a share of each other’s pension or other assets in one party’s sole name. This means that claims often relate solely to property or financial support for children, leaving the financially weaker party extremely vulnerable, and the stronger in a position of power.

So what is the best way to deal with these uncertainties? Prevention is better than cure: consider drawing up a cohabitation agreement, which is a legally binding contract between couples. This would cover such issues as ownership of property, personal belongings and pets; who will contribute to mortgage costs and household expenses; how joint accounts would be divided on separation; and what financial provision will be made for children.

Of the couples included in the YouGov survey, more than 75% had never heard of this agreement, despite the certainty and reassurance they would provide.

Personal protection

The end of a relationship might mean heartbreak, but there are ways to avoid adding financial uncertainty to the mix.

1. Consider buying property in proportion to your financial contribution (a tenancy in common).

2. Get a cohabitation agreement when moving in together.

3. Make a will.

4. Consider a pre-marital agreement if you go on to marry. Similar to a cohabitation agreement, this helps avoid issues in the event of future marital breakdown.

5. If you are a considering lending to your children as the Bank of Mum and Dad, seek legal advice before you commit.


For information purposes only. Readers should seek professional advice for their individual circumstances.


George Sprague

George Sprague

Principal Associate

Mills & Reeve

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

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