Hey, this is Kia. Welcome to another episode of A Little Bit Richer, brought to you by my friends at Legal &; General. Moving in with someone is a big decision. Whether you are renting or buying, there's a lot of
things to think about. So today I'm joined by award- winning family lawyer Yasmin Khan- Gunns. Yasmin's clients range from successful business professionals, celebrities, and stay- at- home mothers to expats, couples moving in together, and couples getting married. Yasmin is also the woman behind the Instagram @ londonfamilysolicitor and shares guidance on some
of the tricky issues that lawyers can help with. She's here today to talk us through what you should be thinking about before moving in with someone, and ways you can avoid getting into a sticky situation if the relationship breaks down. Welcome, Yasmin.
Thank you. Great to be here.
So we are talking about moving in together, people moving in, whether it's friends, family, or partners moving in. And it is a lovely time, it's a great time and people are happy and it's something that we should celebrate.
Yeah.
But there are things that we need to consider before moving in.
Put it this way. You take out car insurance. You take out life insurance. You take out house insurance. All these things are important in case the worst happens. So it's always good to be aware now before you begin cohabiting, before you buy with someone, what could happen in the future. See it as your insurance. This knowledge is your insurance.
I love this. So to start us off, if someone's planning on renting with someone, what should they be thinking about before moving in?
First and foremost, I think they need to be thinking about affordability, because you want to make sure that the person that you are moving in with can afford their payments towards the rent and can afford their payments towards the outgoings. And that's particularly important if you're going to be sharing, for example, bank accounts with them, because their poor credit history could affect you. So that's the first
thing I'd think about. Second thing is tenancy agreement. Make sure you read your tenancy agreement carefully. And also decide whose name's it going to be in. Is it going to be in one person's sole name or is it going to be in multiple people's names? So really have those discussions first and foremost, because that affects your rights and responsibilities under the tenancy agreement. Third thing is think
about the deposit. Who is going to pay for the deposit? Where's it going to be held? And what should happen to the deposit in the event that the tenancy comes to an end or if one person just wants to leave the tenancy agreement early? And finally, I think importantly, is how you're going to split the costs. Talk about who's going to pay the rent, in what proportions you're going to pay the rent, who's going to pay
the utilities, the council tax. So really, it's important to have those conversations at the outset, open, honest communications, and ideally have it written down somewhere, WhatsApp, email, written agreement, anywhere.
I know that a lot of people listening have probably moved in with someone at some point and has not had these conversations, but it makes a lot of sense. But let's talk about after you've moved in, what are some of the things that you should consider to make
sure that you're a little bit more protected? For example, what can you put into place to make sure that if there are any issues that arise, that are dealt with fairly?
I'd start with household budgeting. Who is going to pay for the things that are every day? For example, the food shop, the cleaning supplies, and the communal items. You want to be thinking about having an emergency fund. Maybe you are contributing into a pot every month, maybe 20, 30 pounds, so that in the event that something breaks, such as
a TV, who's going to pay for that? Then you should really be thinking about what happens if one of you, if you're renting with siblings or with friends, one of you gets a new partner and that girlfriend and boyfriend starts coming around more and more often. One day, two nights a week, three nights a week, and then
eventually they're pretty much living with you. How's everyone going to feel about that, and should that new partner be contributing in any way? And I think finally, thinking about exit strategies. What's going to happen if one person wants to leave the tenancy early? What happens to their share of, say, the council tax from the part they were living there or they moved out. And should they get
their deposit back? Or should they get it back now, later, or forfeit their deposit, and what's going to happen? So there's some key things to think about. And I think what really could help in the situation is if the people entering into the tenancy agreement consider having a
cohabitation agreement. And that's a document that can set out the answers to all of these questions, essentially, making it really clear what should happen during the tenancy and in the event that tenancy ends.
So a cohabitation agreement, you said it sets out what that would look like, but does it need to be formal? Do you need to go to a lawyer to do that? Can you have one written out yourself? Can you find a template online? What's the best way to go about actually setting that up?
So just to clarify, a cohabitation agreement is an agreement between two people setting out the financial and practical arrangements during cohabitation and in the event that that cohabitation ends.
So that can include... And I'll go back to your question in a second, but that can include things like, well, if you're buying a property with someone or if you're renting, how the rental payments will be dealt with, how the mortgage will be dealt with, what should happen to the sofa, the TV, the white goods? What should happen in the event of a sale or the tenancy coming to an end? It can include so many things,
including pets. Usually you would go to a family lawyer to draft the cohabitation agreement. And the cost, it really depends. It depends on the hourly rate of the family solicitor, but it could be anywhere between 1,500 to 5, 000 upwards plus VAT,
depends how simple or complex it is. But it's a really, really useful tool to have because it makes everything clear and it makes a separation process, if it gets to that, much easier.
Definitely something to consider. So we've spoken a lot about renting then. If you're planning on buying with someone, is there anything else that you should specifically be thinking about before you move in?
You need to really think about how the property is going to be held. Is it going to be held in one person's sole name or is it going to be held in joint names? You can hold the property in two ways in joint names. To make it really simple, you can hold it as tenants in common or joint tenants. Now, joint tenants is where you hold the property 50-50, unless you have an agreement called a declaration of
trust stating otherwise. And a tenants in commons is where you could hold the property in specified shares. So for example, X has 60%, Y has 40%. Or you can also hold it as 50-50. It's slightly complicated, but you can have it as 50-50 or you can have it as specified
shares. Now the difference between joint tenants and tenants in common, and that's quite an important difference, is with joint tenants, if you sadly pass away, your share of the property automatically goes to the other co- owner. Whereas tenants in common, if you pass away, your share does not automatically go to the other owner, it goes and passes under whoever you've put in your will. Your parents, for
example, or your siblings. That's the first thing you should consider, how you're holding the property. Secondly, how's the deposit going to be funded? Is one person paying the deposit? Are they both paying the deposit? And if they're both paying,
equal contributions, not equal. If it's not equal, do you want some sort of an agreement to say that you get that money back if the property is sold, or are you happy for it just to be 50-50 and you kind of forfeit the bigger amount? So think about your deposit. You need to think about how the mortgage is going to be paid. Sometimes when one person is earning a greater
income, they may contribute a bit more towards mortgage. And alongside that, how the utilities are going to be dealt with. You also need to think about what happens if one of you loses their job or there's an illness. Will one person take over the mortgage payments and utilities or not? To have these discussions really, really early on. And then you should be thinking about property maintenance, repairs.
Are you going to have a fund to deal with that? You don't have the surplus income, it's a bit tricky. So, something to think about. And then what happens in the event that one person wants to sell and the other person doesn't? It happens. How would you calculate the buyout if one person was going to buy out
the other? Lots to think about. And again, a cohabitation agreement can really, really help here, setting all these answers out in a clear agreement to make it super simple for everyone.
There was a phrase that you mentioned earlier, and I want to come back to it, declaration of trust. So I want to ask you, what is a declaration of trust?
Ideally, you would enter into one when you're about to purchase a property. And a declaration of trust is a specific legal document setting out how you and your partner hold that property. So it would set out the shares in which you hold it, whether it's 50-50, 60- 40. It would
set out how the mortgage is being paid. So you could state this person's paying this amount in the mortgage a month and this person's paying this amount in the mortgage. It would set out who paid the deposit or in what proportions, and whether that deposit will be returned in the event of a sale or not. It can set out things like who's going to pay the outgoings, who's going
to pay the utilities. And importantly, it can set out what happens in the event that the couple splits up and what happens in the event of a sale. So I'd say declaration of trust is really important when you buy a property. And if you want to add to the declaration of trust, then you enter into a cohabitation agreement. Because a cohabitation agreement goes further, it gives more flavor to the declaration of trust.
Oh, this is a lot to take in. A lot of people, you don't really factor in everything. And it is sometimes difficult to talk about money, but I think here is highlighting some of the things that should be spoken about, especially before doing something so big as buying a property. It's a massive investment, so maybe having that laid
out can give both parties peace of mind. What happens in the event that there is perhaps a couple who have bought property together, maybe thought they'd be together forever, but sometimes life happens and they end up splitting? What happens to the property in that event?
So if it's being held in joint names, then the couple needs to look at how they hold the property. So going back to holding it as tenants in common or joint tenants. If they hold it as joint tenants, then the law presumes that the property will be split equally, 50-50. If they hold it as tenants in common, then the law will look at what's written in the
conveyancing documents. If something's written, for example, 60-40 split, then that's how the property will be dealt with. If nothing's written, then the law will presume 50-50. So looking at that first determines what should happen. Then you need to discuss with your partner, do you want to sell or
is one person keen to stay in the property? Going back to that, if one person is keen to stay in the property and the other person will agree to it, then you need to work out a buyout calculation for that person that's staying to buy out the person that's leaving.
Working out that calculation differs. Usually you could go to three estate agents to try and find the average value of the property and then work out the calculation from that. Or you can go to a surveyor and get a more formal valuation of the property, which tends to be a bit lower than the estate agent value. Then
what should happen in the interim? Should the person that's intending to stay in the property continue on the mortgage? So discussing those interim arrangements. If there is a sale, however, the parties need to consider who they're going to appoint as their lawyers, conveyancing lawyers, their estate agents. And eventually, the property will be sold or one person will
buy out. But if it's sold and one person's actually like, " Well, I don't really want it to be split 50- 50 because actually I've been contributing towards mortgage more than you. I want a greater share in the property." That can happen. So if one person is seeking a greater share in the property than the original purchasing documents, the burden of proof is on them to show why.
And what does the law say then about how you should divide up the stuff that you've bought or acquired while you're together?
So it's a bit wishy- washy, because actually it really depends on whether you can reach an agreement between yourselves. But generally speaking, personal possessions -- so that's your white goods, your fridge, your freezers, your TVs, your sofas, all your kind of belongings that are shared between you and the house -- if you can't deal with it by agreement, usually the person that
purchased the item will keep the item. But ideally you would reach an agreement between yourself. In terms of gifts. So by the very nature of their name, if someone gifts you something, if your partner gifts you something, you're generally entitled to keep that because it's a gift. So jewelry, for example. If you're given a ring or something like that, you keep the ring. When it comes to
pets, it's quite an emotional topic. Sadly, or maybe surprisingly, they're treated like property, like any other possession. So if you can't reach an agreement on the pets, then what happens is usually the person that the pet is registered in, microchipped in, for example, keeps the pet. But all of this could be put in the cohabitation agreement. You
can deal with it all in the cohabitation agreement. So it would be advisable to look into that if you are thinking of living with someone.
So if you move in with your partner and they own the place, where does that leave you if you were to split in the future?
Not in a very good position, because if you are unmarried, then your rights is extremely limited. So you move into your partner's place and your partner's actually like, " Well, it's not working out. I want you to leave." Technically, you could be out the door the next day. You have no rights to live in that property because you're not married. In terms of any financial claims you can
make over the property. Again, you have no financial interest in that property, even if you've been paying the outgoings, sharing the council tax, sharing the gas and electricity bills.
There are some limited exceptions. They are limited and they are usually confined to if you make direct contributions towards the mortgage or direct contributions towards the deposit, or if you pay for renovation works for the property that substantially increase the property. Then you may be able to claim something. Difficult area of law. It's trust of land civil proceedings.
Legal advice would need to be sought as soon as possible.
So when you say direct contributions to the mortgage, that isn't paying your partner your contribution, that is actually direct to the mortgage company?
Well, it's a bit unclear. You wouldn't pay direct to the mortgage company because the mortgage would presumably be in their name. But if you pay money to your partner and the reference, for example, is towards mortgage, then that's quite good evidence that you are paying towards mortgage. Whereas if your reference was rent, your partner could argue, " Well,
you're not paying towards mortgage, you're paying me rent." So it all kind of depends on what you're labeling.
Oh, such a gray area, isn't it? We've covered a lot in this episode, and it's good to know the things we should put in place to make sure that we're all protected. I almost don't want people to be scared. I feel like we've used a lot of big words. We're talking about if you separate what might happen. And I know that some people might be listening thinking, " Oh, but I'm with my partner. I want to move
in." So we don't want to deter people and scare them. It's just being aware of what you can do to make sure that you're protected so then that blissful time lasts long, and if it doesn't last, you are still protected. But this has been really good, and I've learned so much. So before we wrap up, I want to ask you, what are your top three tips for people to think about before moving in together?
Choose your partner wisely. You want to make sure that you fully trust your partner. You're going into a big thing with them, whether it's renting or whether it's purchasing property. It's a big financial responsibility. You want to ensure that you completely know them and you understand them and that you know about their finances. You do not want to be entering into something with someone who's financially reckless. So,
trust your partner and choose your partner wisely. Secondly, you want to be thinking about having and being able to have open communication with your partner. If you can't have open communication with them, it's going to be very difficult. You want to have communications and talk about what will happen when you start living together and what should happen in the event that things might not work out. Have those discussions.
And finally, I'd say be transparent about your finances. At the outset before you've even purchased property or start renting together, talk about your incomes, your liabilities, what credit cards you have, what debts you might be in, and your savings. Because you're being tied in financially with this person. You need to be aware, at least roughly, what their financial background is.
That's some really good points. And we have learned a lot this episode. So Yasmin, thank you so much for joining us and imparting your incredible knowledge.
Thank you.
Lots to think about before moving in with someone. I'd love it if you could review the podcast, spread the word, and help others get A Little Bit Richer too. Keep up with the show on TikTok and Instagram @legalandgeneral. Thank you for listening. See you soon.