Changes to the Property Relationships Act
Recently, the Law Commission made some proposals to change the Property Relationships Act, in a bid to make it fairer. The questions most people want to know are, ‘What will these changes look like?’ and ‘How will they impact me?’ Let’s have a look.
“Currently the law is that in the event a couple separate, relationship property is to be divided equally,” says lawyer and firm Associate Charles Mullins. “For example, the family home is relationship property. The idea is that partners may make different contributions to a relationship, say for example one partner may earn more money and the other partner may do more for childcare but that they should both share equally in the fruits of that relationship, such as the family home in the event that they separate.”
As the law currently stands, relationship property is currently divided 50/50. Unless of course, you have a contracting-out agreement. Splitting assets down the middle sounds fair, but is that always the case?
When Dividing Property Isn't Fair
“Of course in that sort of situation injustices can arise. So for example a couple could have been together for only three years and one of them could have owned the house before the relationship began. In that situation, the previous owning partner is looking at having to pay out the other partner half of the value of the home,” says Charles.
If they had nothing to do with the deposit or purchase of the home, it doesn’t seem fair they should get half the value if the relationship ends.
“The Law Commission proposes that in this situation where one or other partner owned the home prior to the relationship that only the increase in value of the property is to be divided equally in the event that a relationship finishes,” says Charles.
But that’s not the only change being put forward.
Where one partner may have sacrificed or may have built a career, and the couple have been together for 10 years or more and they have children, it's proposed that there should be a period of time post-separation where the income is pooled. This is to try to take pressure out of situations where one of the partners has much less income than the other partner.
“Other changes being proposed by the Law Commission include making it easier for a Court to divide up assets that belong to a Trust in the event of a separation. They would also like to see children’s interests given more priority. So for example we may see Occupation Orders come in whereby the main caregiver could stay in the family home for a period of time after separation,” says Charles.
Changes Yet To Come
Of course these are only proposals at the moment. Parliament will need to draft a bill outlining which of the recommendations they would like to put and then will need to be put into law, and that’s before it goes through the regular Parliamentary approval process. So any changes to the Property Relationships Act are still some way off.
Of course, we recommend that you talk to us about your circumstances to see how you personally would be affected by these changes. But, if you’re concerned, or want to take steps to protect your property, it’s best to take action now. If you want to know more about Contracting Out Agreements, Trusts, or are going through the separation process, contact Godfreys Law on 366 7469.
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