Couples buying jointly with unequal deposit contributions routinely forgoing legal protection

A third of couples who buy houses together with unequal contributions to the deposit will avoid getting any legal protection for their proportion of the asset as a whole, for fear of damaging the trust in the relationship.

Amongst all joint buyers with uneven deposits, 18% explicitly say they won’t seek a legal agreement for fear of “damaging trust” and placing a strain on relationships. Without such a legal agreement people who, on their own or with family help, have contributed more to the purchase of the property will have no guarantee of getting their fair share if the relationship breaks down.

Research conducted by solicitors Simpson Millar also found that nearly half of first time buyers are using deposits brought together from three or more additional means of buying – a mix of gifts and loans from parents and other relatives, buying with siblings, Help to Buy schemes and shared ownership schemes.

Less than 30% are using just one source of deposit.

38% say they intend to use a Help to Buy ISA and 12% a Lifetime ISA. 32% expect a gift from their parents with 26% expecting a loan. 24% intend to use an inheritance.

Lisa Gibbs, Conveyancing Partner at Simpson Millar Solicitors, said: “Buying a first home today can involve a bewildering array of joint-buyers, gifts and loans from parents, other relatives and support from government incentive schemes. This can lead to large imbalances between the contribution of one buyer and their family, and the contribution of another buyer.

“It isn’t romantic or fun to be the one insisting on legal protection of your financial contribution. But without one, a fair division of assets and the protection of ‘the family silver’ cannot be guaranteed if the property does need to be sold and proceeds divided at a later date – as is so often the case.

“Owning bricks and mortar these days is increasingly a luxury that can only be enjoyed by people with a network of supportive relatives and the support of government policies designed to boost home ownership.

“While this is a heart-warming story in many respects, the potential for equity held in the property to be divided in a way that is unfair on one joint owner and their benevolent families is a real one – and a risk families and their loved ones need to take seriously at the point of purchase, when legal protection by way of declarations of trust can be put in place easily. You wouldn’t sign a £20,000 plus contract for anything else in life without reading the small print. But when it comes to property, emotions can get in the way of common sense.”

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