The family home is in many cases the most valuable asset owned by a couple. On divorce it is considered a unique asset and is often treated differently to other asset classes, such as pensions or investments, by the Family Court, which takes the practical view that its primary concern ought to be to ensure that each party has a roof over his/her head.
The family home may be owned in various different ways; by one party or jointly, be owned by a company, and/or held in a trust structure. Although it is possible for a couple to be married and for the home to be owned in the name of one of them, judges generally give little weight to this when it comes to dividing the assets on divorce. A non-owning spouse can register what is called a "matrimonial homes right notice" in order to protect his/her interest in the property pending an agreement.
In contrast, the court's approach to resolving disputes between unmarried couples is very different and the legal/beneficial ownership will be highly relevant. It is still not uncommon for family lawyers to have to remind cohabitants that their 30 years of unmarried bliss does not an interest in a property make.
On divorce, the courts can make various orders in respect of the home:-
- Transfer from one spouse to the other;
- A sale and for the proceeds to be divided between the spouses either in specified amounts or by percentages in order for them to rehouse themselves separately;
- The home be kept in joint names but that only one person remains living there. The property is then sold on a triggering event such as death, remarriage or the youngest child finishing education.
A court gives priority to any children of a marriage. Therefore the parent who has the primary care of the children will often succeed if he/she applies for the marital home to be transferred to him or her, provided there are sufficient assets to re-house the other spouse. Alternatively, as mentioned above, the court may postpone division of the property.
Problems can arise where parties make unequal contributions towards a property purchase. This has become especially widespread in recent years with the increasingly high cost of getting onto the property ladder resulting in family members often providing financial assistance. Even if there are no children the presumption is still for equal division of the property, regardless of where the money has come from, unless either party can show that this would be inappropriate (such as a short marriage with no children, or if the assets exceed both parties' needs and the house has been purchased with assets built up by one party before the marriage). It is a common misconception made by a person who puts the majority of the funding into the matrimonial home that their contribution will automatically be protected on a divorce.
SDLT can, in some cases, be something of a gift to the party wishing to remain in the family home. Take the stereotypical, though common, scenario where the husband is the breadwinner and wife the homemaker living in a property with the children worth around £1m. Her basic housing need would be set at this level. If she were to sell and rehouse equivalently, stamp duty coupled with selling costs would be in the region of £74,000. This cost, coupled with a not uncommon fact pattern of a husband who is enjoying very little contact with the children might bolster the wife's claim to stay put given the expense involved in moving and the comparatively low need of the husband. Bear in mind that re-housing at £2m would have associated costs (being SDLT and agent fees) of over £210k and at £3m, £363,750.
A novel solution to the problems posed by the family home on divorce is the concept of "nesting", something which took off in the States and has gained some traction here. The idea is that the children remain permanent residents of the family home, whilst both parents take turns rotating in and out, living either in two new separate homes or in another shared flat for the remainder of the time. Although advantageous in respect of minimising a divorce's disruptive impact on the children, nesting has its drawbacks as a long term-measure. For one thing, paying to maintain the family home in addition to separate alternative properties is a potentially pricey prospect for both parties. It goes without saying that this is something that will only work for couples who have remained on relatively amicable terms.
The Family Court is a practical one, forced to consider market changes and financial pressures. Creative solutions to these issues continue to be tried and tested in order to try to reach fair and workable outcomes for all concerned.