Housing Needs and Divorce: Key Options and Considerations

The question of where a divorcing couple and their children may live following separation and divorce is often one of the most pressing and worrisome issues facing a couple.

Accommodation is a basic necessity, yet the family home is often much more than just accommodation. It may have strong emotional meaning or hold bad memories. It may also represent a significant proportion of the family assets.

The Family Home

The family home is, by definition, where a couple resided during their marriage. It may have been bought by the couple in their joint names during the marriage or a property that was purchased or inherited by one spouse prior to the relationship or during.

When considering the financial aspects of a divorce, the family home is regarded as a matrimonial asset. This is the case regardless of whether it is owned in one party’s sole name or subject to a trust in unequal shares.

What happens to the family home will very much depend upon the facts of the particular case, with the ultimate goal of seeking a fair outcome. In order to achieve fairness in divorce, all assets are taken into account, including assets which are in joint names or in the sole name of one spouse. The starting point for consideration is an equal division of what may be regarded as matrimonial assets. However, all of the circumstances must be considered, including:

• The needs of any child of the family under the age of 18
• The needs of the parties
• The parties’ incomes, earning capacity and resources
• Conduct if it would be inequitable to disregard
• Length of the marriage
• Standard of Living
• Contributions

The scope of discretion available to the court means that every case depends on its specific circumstances. By way of example, a short marriage with no children and no relationship generated a need where all assets, including the family home, were owned prior to the marriage, which will not result in an equal division, if any division at all.

However, in the case of a long marriage in which one spouse may have sacrificed their earning capacity to take care of the children, the source of the family home may have far less importance.

In every case, the first step is for both spouses to provide each other with full financial disclosure of their respective financial positions. With regards to the family home, it is likely to be a good idea to get a couple of market appraisals from local estate agents to identify what the property is likely to be worth and also get information from the mortgage company to confirm how much is owing on the mortgage and also whether there are any penalties that might be payable if the mortgage was paid off now.

Potential Outcomes

When considering a family home that is owned either in joint names or in a spouse’s sole name, there are generally three potential outcomes:

1. The house is transferred to one spouse/retained by one spouse on an outright basis. This might be in return for a lump sum payment to the spouse leaving the property or in return for “giving up” a share in other assets such as a business or pension (offsetting).

Where the house is mortgaged, this will almost certainly require consideration as to when and how the spouse leaving the property is to be released from the mortgage and whether any mortgage payments, along with the general cost of upkeeping the property, are affordable. When considering the options, it is a good idea to speak to an independent mortgage advisor to determine whether you can borrow sufficiently to take on the existing borrowing. If there are no other assets to trade off against, borrow sufficient additional money to raise a lump sum.

It is also really important to consider how the housing needs of the spouse leaving the property are to be met. Where assets such as business interests or pensions are being used to trade off that interest, whilst they may be of significant value, they may not be easily realisable to fund the costs of alternative housing.

2. Another option when dealing with the family home is for this to be sold, and the proceeds are divided to enable the divorcing couple to purchase either one or two alternative properties or move into rented accommodation if there is insufficient space to allow both to purchase.

This is a likely option if it is considered that the family home is bigger than is reasonably required and there are insufficient assets to allow the luxury of both being housed in larger properties than they need, or its retention is unaffordable. For example, a couple who are divorcing and have one child would have difficulty in suggesting that either of them needed a four-bedroom house.

In this situation, it is essential to know what each spouse’s mortgage capacity might be and also what the cost of alternative accommodation could be. Property particulars can be obtained from estate agents or online platforms such as Rightmove.

When considering alternative accommodation, it is a good idea to identify the areas that would be likely suitable, regarding children’s schools or commuting distance to work. Unless there are exceptional reasons, it is unlikely to be justified for a spouse to suggest that they need bigger or more expensive accommodation than that offered by the family home or a need to move to a more expensive area. Where assets or borrowing capacity is limited, consideration can also be given to shared ownership schemes.

3. A third option when dealing with the family home involves the property (or an alternative property) being retained until a specified point in the future on the basis that until that point, one spouse will move out and allow the other spouse to live in the property.

The specified point in the future when the house must be sold will commonly include the point when the spouse staying in occupation remarries or cohabits, voluntary sale or death, and any children attaining the age of 18 or finishing full-time education.

This option is of particular help where there are children in the family, but there are insufficient available assets to fund two properties. Rental accommodation may be a potential option, but this does not provide the same level of stability and security for either party or their children and will often result in them having to dip into their capital. This option allows both spouses to leave their money invested in the family home and secure it until a future point.

It does, of course, have its drawbacks as it results in one spouse being denied access to their assets for what can be a significant amount of time. Consideration must be given as to how their housing needs are to be met in the meantime.

For the spouse living in the property, whilst they will benefit in having secure accommodation for a period of time, there will come a point when they have to either repay their spouse or sell their home and look for new accommodation. Whilst they will have some time to plan their options in this regard and build up their income, for example, the reality is that no one knows what the future might hold.

Other Key Points

Rights of Occupation

When a couple are married, they will both have occupation rights with respect to the family home, even if it is owned in the sole name of one spouse. It is common and advisable for a spouse who is not named as a joint owner of the family home to register a Matrimonial Homes Rights Notice at HM Land Registry. This ensures that there are no dealings with the property without their being notified.

That right of occupation would come to an end once the final divorce order has been granted unless it has been extended by a court order. In this situation, it is likely to be highly advisable to ensure that the financial aspects of the divorce are dealt with before the divorce is finalised.

Method of Ownership

The law of England and Wales allows for jointly owned property to be held as joint tenants or tenants in common with specified shares. It is often the case that married couples will have agreed to own the family home as joint tenants when that has been purchased during the marriage. When a property is owned as joint tenants, the couple each owns the whole of the property in undivided shares. Should either of them die, the property will automatically belong to the survivor. When a couple divorces, they will often wish to make alternate arrangements for their estate in case they should die before the financial arrangements and divorce have been finalised. Should this be the case, steps will need to be taken to sever any joint tenancy and to make a will.

Given the complexity and importance of decisions surrounding finances as part of divorce proceedings, it is very important to get advice from a family solicitor.

(This article was originally posted on 13 September 2021 and updated in November 2024)