Buying A House As A Couple – What You Should Know
Buying a House With My Partner
Buying your first home together as a couple should be as exciting as it is nerve-wracking. It can feel like the start of the rest of your life together but equally as scary because it’s most likely certainly the largest financial investment you can make with another person. No amount of planning will completely remove all of the stress from the property purchase process but both you and your partner can take some steps to ease any anxieties and maximise your chances of success. Compare conveyancing solicitors and conveyance fees online with conveyancing supermarket, your trusted partner in the property purchase process.
Things To Consider Before Buying A House With A Partner
Hopefully before you have arrived at this point, you and your partner will have sat down to have a conversation about your motivations, dreams, and the realities that will determine your future living situation.
If not, have a conversation or two about the following:
- Why do you want to buy a house together now?
- What do we want from a home?
- How much can you afford?
- What is the budget and timeline?
- How will costs be divided?
- What type of ownership should we choose?
- What happens if we break up?
None of us knows exactly what the future holds and many issues can not be foreseen, but the joint purchase of a home is a long-term investment that requires some reflection on what your future may hold.
Further Things To Consider
Do you have children or are you planning to have them? Is there a chance that anything else will affect how much space you’ll need such as working from home. The possibility of kids will mean you will need to consider the local school situation.
Is a commute acceptable for both partners? How established are your careers? If you change jobs, will you want to remain there? Not all careers can be pursued from the same location so consider whether to anticipate another move in the future.
- Hope For The Best But Plan For The Worst
Whilst it might be tough to contemplate right now, you should consider the worst-case scenarios. If either of you becomes unemployed, can you still cover your mortgage and will you be able to find new employment? What will happen if you break up? Your relationship status could affect your property ownership or your mortgage affordability.
Whether you are married or in a civil partnership, or together but unmarried, the status of your relationship matters for property ownership.
The key differences for joint home ownership are legal, especially with regard to when and if the couple decides to separate. Often, people living together in unmarried relationships have fewer defined rights than those who are married or in civil partnerships. This means you should discuss what should happen if your relationship ends or one of you dies.
With married couples, the courts will decide how to deal with all assets of the marriage if you cannot agree yourselves, including the jointly owned property, and will redistribute them fairly. If both partners in the marriage want their wishes taken into account, they need to agree this when buying the property.
Unmarried partners do not have such a clearly defined legal recourse. If an unmarried couple sells their jointly owned property, then the proceeds are distributed solely based on the couple’s own agreement. It’s therefore essential that unmarried couples issue clear written instructions to their solicitors about what they want to happen in the event of the death of a partner, or following separation.
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Legacy: Remember: an unmarried person doesn’t have a right to the fair distribution of assets amassed during the relationship. Your relationship status also affects inheritance and capital gains
IHT: Whether a couple is married or unmarried is also relevant to other issues related to property ownership. For instance, if you’re married and your spouse dies, you don’t pay inheritance tax. Unmarried couples, however, may.
CGT: Marriage or civil partnerships also means an effective doubling of your Capital Gains Tax threshold so you and your partner can transfer assets between yourselves tax-free during your lifetime.
Types Of Tenancy
When a couple decides on a property, there will be two types of ownership to decide between:
- Joint Tenancies
- Tenants In Common
If you are ‘joint tenants‘ both of you will own the entire property – rather than each having a separate portion of the house. If you’ve bought your home with your spouse or civil partner, you’ll usually own it on a joint tenancy basis.
If you sell your home, or rent it out, you’ll split the profits evenly. If one owner passes away, their share will automatically pass to the surviving owner.
Tenancy in common means that rather than owning the entire property together, each owns a share of the property. These shares might be equal, but don’t have to be. Unlike joint tenancy, if you sell or rent out a home you own on a tenancy in common basis, you’ll divide the amount you make based on each owner’s share of the property. If one of the owners passes away, their share is dealt with according to their will – rather than automatically transferring to the surviving owners.
Selling A Jointly Owned Property
Joint Tenancy – If only one of the owners wants to sell, they will have to apply to the court to do so. It will be at the court’s discretion whether the sale will go ahead. They will take into account the co-owners personal and financial situations and any dependents who live in the house.
Tenants In Common – Tenants in common have to sell at any time that one of the co-owners wishes to sell the property. Usually the Declaration of Trust will include instructions on how the other owners can buy the share of the owner that wishes to sell, and they’ll have first right of refusal . If you don’t want to sell, you’ll get the option to purchase before the property is advertised to other buyers. If the property ends up being sold, the amount made will be split between the owners depending on the size of their share.