Deciding how to split house equity after separation

KaratePigeon

Hi, myself and my partner have come to the decision to separate. We have been together for 20 years but not married, 3 school age children.

We are trying to work out how to afford to live separately, would like to avoid solicitors etc if possible.

I'd like to stay in the house but can't afford to buy him out. I could probably just about afford the mortgage on my own but it'd be very tight. I am the higher earner, have always earned about twice as much as him. I think the only option is for us to sell the house.

The kids will stay with me, he might have them for occasional visits but he wants to move quite far away. I'm not relying on getting any maintenance for various reasons.

He is self employed and works from home, his job requires him to have equipment where a flat or house share would not be possible.

So we have about £130k equity in the house. He thinks he should be entitled to half. I think it should be significantly less, mainly becuase I need to buy a reasonably sized house in the area we are currently in, to keep as much stability for the children as possible. (I've also contributed a lot more financially over the years but won't go down that route and can't really prove it).

The equity will be my deposit for a new house and what percentage I can have will be the difference between the kids having their own bedrooms (which they are used to) and whether we can stay in the same nice area or have to move somewhere quite rough.

How do we decide what is a fair split? is it worth involving a solicitor etc or are they really that expensive and I'd loose even more money when things are going to be really tight anyway?

pjcox2005

No expert, all i would say is that splitting from one to two houses is rarely affordable for people to get the same standards as they had before. One, if not all, reduce what they can afford as it simply costs more to buy and run two places. I know that states the obvious but it may be that you all have to reassess what is practical in terms of areas, size of house etc.

50:50 would be the starting point personally, but then I'd expect higher maintenance payments to be made after that.

If you are proposing a counter offer to this due to kids being at home which is reasonable, then could you state small amount now for him but when the kids turn 18 you downsize or pay him an amount that either levels it up or slightly over as he won't benefit from growth in value of houses, lower interest if he had a bigger deposit etc. Would that potentially persuade him without unsettling kids as much? 

Sadly, there is never going to be a clear answer on what's fair. You can make a case for most splits between 75:25 i expect. The question is probably if you can compromise or if not do it with some guidance from a solicitor without incurring to many costs on legal advice.

KaratePigeon

Thankyou, yes we've accepted we will separately be in a worse housing situation than before. Currently have a 5 bed detached and I'm hoping to move to a 4 bed terraced in a similar area - but if I only get 50% of the equity this will be more likely a 3 bed terraced in a worse area (which the kids will hate as they are used to having their own bedroom).

I'd rather come to an agreement where he takes less of the equity maybe in place of him having to pay maintenance as it'd be cleaner.

Thought about doing some agreement where he gets the rest when the kids turn 18 but it seems like that's a long time to have that hanging over me (youngest is 8). Plus wouldn't I need a solicitor for that anyway or would he just trust me to?

If I do get some advice who do I need to speak to, a family solicitor? or are there cheaper options? how much do solicitors cost anyway, is it really that bad?

Savvy_Sue

If you were divorcing, you'd pretty much have to go to mediation, and that might be useful anyway. Would be worth phoning a few family solicitors to get a feel for what they offer, and ask about mediation. 

I'd strongly encourage you to get a legally drawn up agreement: you may be willing to trust each other now, but things can change. 

Exodi

Maybe a more experienced forumgoer could clear this up for me - if he agreed that you could take a bigger chunk of equity in lieu of maintenance, what protection would he have against you reneging after the funds have been transferred?

I feel like you would always be able to claim maintenance from him, regardless of what equity split you agreed - is it possible to legally stipulate that the equity is in lieu of maintenance obligations? If not, I wouldn't blame him for prefering to hold on to the equity and pay it through a formal or informal maintenance arrangement, than relinquish it and still potentially get hit by maintenance also down the road.

Savvy_Sue

I don't think you can ever bargain maintenance away: the PWC always has the right to initiate a claim.

kimwp

Why on earth should he get half when you need to house the kids and will be looking after them?! There are four of you and one of him, I suggest the equity gets split that way, at least until the kids are grown up.

federickjohn

You have children and it is better to split equity and look after the kids. 

Exodi

kimwp said:

Why on earth should he get half when you need to house the kids and will be looking after them?! There are four of you and one of him, I suggest the equity gets split that way, at least until the kids are grown up.

That's what maintenance is for.

AnnieB2018

There is no divorce as they never got married so the house equity is already split as per the land registry records (unless they can agree to re negotiate it now). So what’s on the deeds then?

gizmo111

Speak to a mortgage broker and see what your options are to remortgage this house, you will be taking a new term which will be longer than what you currently have and may give you options to stay in this house without spending on the legal fees, estate agents stamp duty costs etc of selling and moving.