Protecting property investment through changing family circumstances was first published in FT Adviser on 6 August 2026
For most clients, buying a property is the largest financial commitment they will make. Whilst they usually give careful thought to affordability, mortgage structuring and financial planning around the purchase, clients tend to be less aware of the need to consider how the underlying benefits in the property should be recorded and might change.
Understanding how property ownership can be impacted by financial contributions and relationships is key. Early conversations are advisable if a client is buying with another person, planning to cohabit, get married or gift money to a family member. We will look at each of these in turn.
Whether a client is buying a property with a partner, friend or family member, it is important to be clear about how they wish to share ownership on purchase and how future financial contributions will be treated.
Legal ownership will be registered at the Land Registry but might differ from the underlying beneficial ownership in a property. In the absence of a clear written agreement, financial contributions and agreements between the client and other buyer(s) will determine beneficial ownership. A client might agree to gift a share in a property or that paying the mortgage will earn a share over time. If there is disagreement between individuals about what has been agreed, the courts have the power to declare how the property is to be shared. Property litigation of this type is expensive, uncertain and divisive and somebody will typically end up with less than they expected.
To guard against this risk clients should be clear about who has an interest in the property at the outset and decide if and how that might change. It is also sensible to consider practical aspects such as who will meet ongoing costs and when and how the property can be sold.
Routine questions to ask include:
A Declaration of Trust can be used to record the financial contributions made and agreed ownership shares at the time of purchase. This commonly caters for co-owners who wish to own the property in unequal shares but might also record a gift used to purchase a property, increasingly common as parents help their children on to the property ladder. Inter-generational gifting is often considered in the context of wider estate planning considerations.
A Co-Ownership Agreement can record shares on purchase but also look to the future – who will pay the mortgage, bills or fund repairs, whether payments will impact ownership shares and how and when the property might be sold.
The same considerations will apply if one person owns a property and another moves in and helps to meet the costs. Whilst straightforward rental and lodging arrangements might be clear, a long-term lodger, particularly if a friend or family member, might contribute time or money towards maintenance or improvements in the expectation of a share in the property.
The reality is that people often have very different expectations as to how their contributions to a property will be treated and quantified. In the absence of a clear written agreement a court decision will be based on an assessment of available evidence meaning trawling through years of financial contributions and messages between parties in addition to the original purchase files.
It is often when living arrangements change that disputes emerge. One person might want to move out or sell the property whilst the other wants to stay. Another might agree to a sale but require compensation for their financial contributions. The death of a party can lead to a dispute between their beneficiaries and the surviving co-owner who does not want to sell.
There are many different scenarios that might unfold. Having the right discussions and being clear about intentions at the outset can remove uncertainty and recording intentions in a written agreement will provide significant protection in the event of a dispute
Many people still mistakenly believe that living together creates a "common law marriage", giving unmarried couples legal rights similar to those enjoyed by married couples. In reality, common law marriage does not exist in England and Wales and cohabitees are governed by the legal principles described above.
Few couples will have thought to record discussions about co-habitation and property in writing and many will have differing expectations. Their lives are likely to have been more entwined than other house sharers, and financial contributions may be less direct, potentially widening the scope of the dispute.
One of the biggest decisions a couple might make is to have children together. This invariably leads to further financial compromises as caring responsibilities and costs are juggled. On separation unmarried parents can make financial claims for their children, to provide housing and to meet living costs, but there are no standalone claims to support a parent. An unmarried parent may suddenly face the prospect of losing the home they have lived in and the financial support provided whilst they took on caring responsibilities. The prospect of having to evidence an agreement that a property is to be shared can be daunting. There is no scope for decisions based upon fairness.
A Cohabitation Agreement can help couples record how they intend to manage their finances and property – both during their relationship and should it end. Like a Co-ownership Agreement it will set out how the value in the property is held and how costs will be met, but it might also consider how the couple wish to share other assets and approach other aspects of their relationship, for example if one person:
· Makes non-financial contributions to the relationship;
· becomes financially dependent on the other;
· reduces their income or stops work to care for children; or
· suffers ill-health or redundancy.
Agreeing what happens if one party dies – will the other inherit the property or have a right to continue to live in it? – is also sensible, making specific provisions that mirror those in their Will. This provides clarity for other family members (children from another relationship or siblings, for example) who might not be aware of the couple’s intentions and have their own financial expectations.
Whilst the legal orders that a court can make are limited, a Cohabitation Agreement can provide valuable evidence about ownership and the parties' intentions for each other. It might also help a couple to make decisions during their relationship that ensure that one party is not left financially prejudiced whilst being clear about property ownership.
It is worth noting that the law relating to cohabiting couples is currently under review, following the launch of the Government consultation “A Fairer End to Relationships”. It proposes greater protections for certain cohabitants when relationships end, looking beyond property ownership to consider additional lump sum, income and pension share orders together with improved inheritance rights where a partner dies without a Will. These orders would be based on financial need, addressing circumstances where one party is left financially vulnerable following the breakdown of a relationship.
The proposals do not mirror the financial claims that can be made after marriage, but they would create a new legal status for couples in a qualifying “romantic relationship”.
Broadening the scope of legal claims available to cohabitants would likely increase the use of Cohabitation Agreements as couples endeavour to regulate their financial relationship and guard against the risks of unquantified future claims.
Clients may believe that property they own before marriage will automatically remain theirs if the marriage breaks down.
In fact, it is much more complicated than that. Marriage gives the court wide powers to redistribute assets in the event of divorce, no agreement to share is required. Orders can; and often will, include the sale or transfer of property acquired before the marriage. This is because financial settlements on divorce first consider how to meet parties’ financial needs, regardless of financial contributions.
In the vast majority of cases where marriages end, all available resources are needed to house both parties. As a result the distinction between matrimonial property (loosely, property created during the marriage) and non-matrimonial property (largely, property owned before the marriage or received by way of gift or inheritance) is not as impactful as many clients believe.
Where there are excess funds after financial needs are met, consideration will be given to one party retaining some or all of their non-matrimonial assets. There may well be debate about whether non-matrimonial assets have become “matrimonialised”, a process considered carefully in the recent case of Standish. Evidence regarding the use of the property during the marriage and the parties’ intentions regarding the property will be considered. For example, using a pre-owned property as the matrimonial home or purchasing a holiday home with inherited funds. Property that has been “matrimonialised” can no longer be ringfenced for the original owner.
If clients wish to protect property that they already own from the consequences of divorce, specialist advice regarding a pre-nuptial agreement may be appropriate. Whilst not automatically binding, a properly prepared prenup will carry significant weight if the relationship later fails. Many prenups specifically identify property that will not be shared on divorce. Whilst this cannot remove the considerationof individual party’s needs, it can impact the way in which needs are met andwill often have a profound impact in wealthier marriages.
“A Fairer End to Relationships” also proposes thecodification of the law surrounding pre-nuptial agreements which would make clearthe circumstances in which they would be upheld.
It is increasingly common for first-time buyers to rely on their parents to help them get onto the property ladder and forwealthier families to make use of additional lifetime gifting to help avoidinheritance tax.
Often parents and grandparents will be intending thattheir money is preserved for family members and, in some cases, will remainavailable for future generations. They rightlyworry that a failed relationship could see an inheritance being shared outsideof the family.
Clients can encourage their chosen recipients to ring-fenceand protect funds using any one of the agreements referred to above, dependingon the circumstances.
A post-nuptial agreement might also be used to protect a family gift made after marriage rather than before.
In my experience many property disputes could have been avoided if the parties had understood the potential risks and discussed key issues from the outset. Uncertainty and differing expectations are often at the heart of disagreements. Taking the time to have sensible conversations and record agreements appropriately can provide significant protection and peace of mind for the future.
Complete your details below and we will contact you to book a free, no-obligation consultation at a time convenient to you.
Please note we do not offer Legal Aid
