A joint Birketts and Citystay guide exploring TOLATA reforms, cohabitation rights, and the evolving property market in England and Wales
This article marks the conclusion of a four-part series, a joint effort between law firm Birketts and Citystay Property Agents, designed to simplify the intricate issues surrounding property co-ownership. In this final instalment, we:
– examine the anticipated reforms in respect of cohabiting relationships.
– explore the potential effects these changes could have on property claims.
– share our insights on the future trajectory of the property market.
Are legal changes for cohabiting couples on the horizon?
The new year often prompts a period of reflection for couples; an opportunity to ‘get their houses in order’ – and that goes for cohabiting couples as much as other partners.
Cohabiting families are more vulnerable to separation than their married counterparts. According to the Marriage Foundation, 43% of unmarried parents separate compared to just 8% of married parents. Despite their higher likelihood of dissolution, cohabiting families are on the rise. Office for National Statistics (ONS) data reveals that in 2021, 18% of all families were cohabiting couples – a stark increase from 1.5 million in 1996 to 3.6 million today.
However, the rights and legal protections afforded to cohabiting couples fall far short of those available to married couples.
A common misconception persists among cohabitees: many believe that living together for an extended period or having children together will grant them similar legal rights to marriage or civil partnership. This so-called “common law spouse” myth can have devastating consequences when relationships fail and disputes are determined under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
Strengthening the rights and protections of cohabiting couples was a priority highlighted in the Labour Party’s manifesto, suggesting that reforms could soon be on the legislative agenda.
What could law reform mean for cohabitees?
The precise scope of any legal reform remains uncertain. However, it is likely that the Government will examine solutions implemented in other jurisdictions when considering how to enhance protections for cohabiting couples in England and Wales.
A key question will be the criteria used to determine when a relationship qualifies for such protections. In other countries, this often depends on the duration of the cohabitation.
In New Zealand, for example, the Property (Relationships) Act applies automatically to ‘de facto’ couples who live together as though married or in a civil union. For relationships lasting longer than three years, relationship property – such as the shared home – is divided equally, barring exceptional circumstances, even if one partner owned the home prior to the relationship.
If England and Wales were to adopt a similar system, how would the start of cohabitation be defined? Should the qualifying period be shorter if the couple has children together?
Under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, cohabiting couples in Ireland may seek court orders akin to those available to married couples. To qualify, the couple must have lived together in an “intimate and committed relationship” for at least five years – or two years if they have children together.
To what extent should the courts be required to scrutinise the respective contributions of the parties before dividing up their property interests in this way? Scotland offers another approach through the Family Law (Scotland) Act 2006. In Scotland, cohabitants may claim financial compensation if they can demonstrate economic disadvantage or that their partner derived economic advantage from their contributions during the relationship.
Challenges ahead
If England and Wales were to adopt similar measures, lawmakers would need to address complex issues such as:
- Defining qualifying cohabitation periods.
- Establishing whether shorter periods should apply for couples with children.
- Deciding whether courts should assess each partner’s financial contributions before dividing assets.
- The extent to which the couple can contract out of the automatic protections contained in the legislation, such as by entering into a written Cohabitation Agreement.
While reform is undoubtedly on the horizon, its eventual form will require careful balancing of competing interests to ensure fairness and clarity for cohabiting couples.
This discussion signals a critical turning point for cohabitation rights in England and Wales, emphasising the growing need for legal recognition that reflects modern family dynamics.
What other changes lie ahead for the property market?
There exists a similar uncertainty around proposed legislative changes from the Labour government that may or may not impact the property market moving forwards.
The Renters Reform Bill is scheduled to come into law in 2025, which will provide additional protections for renters, whilst promoting better/improved practice from an energy efficiency perspective. The continued legislative changes for landlords may have an interesting impact on the rental market, as increased regulation may lead to a lower stock of available rental properties. This of course would only seek to drive rental values up. Conversely, this should and could improve the standards of rental properties available across the country.
Likewise, the upcoming decrease in SDLT thresholds, particularly for first-time buyers may lead to an immediate rush in first-time purchases prior to 1 April 2025. Combining this with the trend for a decrease in marriage rate further adds to the importance of understanding cohabiting rights and Cohabitation Agreements.
At Birketts, our dedicated Home Ownership Disputes team specialise in procuring orders for sale under TOLATA. We work with expert, local agencies such as Citystay Property Agents to give clients the best support possible.
Citystay Property Agents are a full-service residential estate agency based in Cambridge. Our fresh perspective is built upon a customer centred approach, ensuring the best outcomes for all of our clients.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2025.