IMPORTANT UPDATE: COVID-19

In circumstances where a couple are unmarried and have jointly owned property they may be living separately whether voluntarily or having been excluded from the property by their partner.

The person remaining in occupation of the property (the occupier) may wish to claim from their previous partner an amount by way of contribution towards unmatched mortgage payments or payment of other outgoings necessary to maintain the property after separation. This could include buildings insurance, and rates.On the other hand the person who is no longer living in the property might consider an application for “occupation rent” as this is a claim available in principle in any dispute between cohabitees relating to property ownership. A prominent Court case in 2007 clarified that there does not need to be a forcible exclusion from a property for payment of occupation rent to arise.Consideration is given instead as to whether or not it would be “just” for occupation rent to arise and to be paid.In other words, it would depend on the circumstances of the case.

However, whenever there is a dispute regarding ownership and shares in a property following the end of a cohabitating relationship, consideration should be given as to whether or not occupation rent should arise. Factors which should be taken into account include each parties’ circumstances, “who has paid for what” during a period of separation and how the party who is not able to live in the joint property, has been accommodated elsewhere.

In many disputes of this kind it will be argued that the payment of mortgage and other outgoings on the joint property by the occupier should be “set off” against the payments for rent and the like made by the former occupant whilst living elsewhere.In other words the occupier pays for the whole of the mortgage and the outgoings whilst they have the benefit of living in the property and instead of making any separate payments to their former cohabitee by way of occupation rent.However, if the mortgage payments being made include capital and interest then they are in the first instance entitled to credit for unmatched capital contributions.

Consider the following example:-

The monthly mortgage repayment on a joint property is interest only and the monthly repayment is £200.If the notional rental value of that property (the relevant figure for occupation rent) was say £1,000.00 pcm and the former cohabitee is paying £1,200.00 pcm to rent a similar property elsewhere this may be a good argument as to why “set off” should not apply save to a very limited extent.

Ultimately consideration of equitable accounting for payments made whilst in a property following separation and the concept of occupation rent may be an important factor when distributing sale proceeds following the breakdown of a relationship particularly if the parties have been separated for some time before any sale takes place – all too likely a scenario at the moment in our “stalled” property market pending the end of the Covid-19 lockdown and its effects- whenever that may be.

If you would like to speak with a member of our Family team then please call on 08000 147720 or send us an email to book a free information session. We can still offer our 30 minute free consultation, which can take place via telephone or video link, to ensure that government advice regarding social distancing and staying at home is still adhered to.