Cohabitation and Ownership: Key Considerations for Sharing a Home

Living together is a significant step in any relationship, but it can become complicated when one partner owns the home while the other does not. If this describes your situation or if you are considering having your partner move in, there are several factors to consider to ensure financial fairness and peace of mind for both of you. It is better to have these potentially difficult conversations now so you understand each other's positions both now and in the future. The information and advice provided below pertain only to unmarried couples or couples who do not have a joint mortgage and one person solely owns the property. 

1. Accruing Equity in a Property vs. Paying Rent: Understanding Contributions

When someone buys a property, they make a deposit and then build equity by paying off a repayment mortgage. When the property is then sold, they may then hopefully benefit from the accrued equity. However, if someone is living at the property but is not an owner named on the mortgage, and is contributing only to bills or even the mortgage without a formal agreement, they will not automatically be entitled to anything when the property is sold / no claim on a share of the home equity if the relationship ends. While sharing household expenses is natural, ownership of the property—and the rights to any future proceeds from a sale—are another matter entirely unless explicitly agreed upon in a legal document like a cohabitation agreement. Without a cohabitation agreement, you don’t have many rights.

The only way a person CAN legally ask for a share of the equity (and it will have to go through a lengthy formal court procedure) is if they can prove that they have acquired an interest in the property, perhaps by contributing to the mortgage long-term or showing that there was a shared intention that they would have a share, or that they paid for significant improvements/renovations to the property. But this is all very much on a case-by-case, individual basis with no guarantees, even if children are involved.

2. Avoiding Misunderstandings with a Cohabitation Agreement

A cohabitation agreement can prevent misunderstandings before they arise. This legal document for unmarried couples outlines each partner’s rights and arrangements for finances and property or even children while living together and clarifies what would happen in case of a separation.

 Cohabitation agreements are not just for romantic partners—they can be set up between friends or siblings sharing a property as well. By clearly setting out expectations in advance, you can avoid potential legal disputes and ensure a clear understanding of each person’s financial stake. See here for more information from The Law Society on what a Cohabitation Agreement can offer

3. Charging Rent: A Practical Approach

It might feel unromantic to charge your partner rent or vice versa, but setting up a rental agreement can provide financial clarity. This way, the partner who does not own the home contributes to household expenses without a claim on the property itself.  Each partner can handle separate financial responsibilities: the homeowner covers the mortgage, while the partner pays a rental fee or contributes to bills. This setup can help protect both parties’ financial interests, especially if the relationship does not work out.

4. Going to a Solicitor

When you contact your solicitor, they may ask about;

• The value of both of your assets, like savings, investments, pensions
• If you rent or own a property, and whose name the property is in
• Any property improvement work either of you has paid for
• Both of your earnings
• If you or your partner have any children

Find a solicitor near me (Law Society search tool).

The cost of obtaining an agreement can vary based on your specific circumstances, ranging from £300 to £4,000. Solicitors often provide free estimates, so it is beneficial to shop around and compare both costs and services. Keep in mind that you may incur significantly higher legal fees if issues arise and you do not have a cohabitation agreement in place.