There are now more than four million unmarried couples in England and Wales. By 2031 an estimated one in four opposite sex couples will cohabit without marrying.
Although cohabitants have been granted a variety of new legal rights, they still have less protection from the law than their married counterparts - particularly when a relationship ends. Many unmarried couples mistakenly believe that by living together they enjoy common law status. Sadly, this is a fallacy: it is a meaningless term.
When married couples divorce the courts can exercise discretion in deciding how property and other assets are divided. There is no such framework for cohabiting couples in England and Wales - ill-suited property law is currently used - and the result is a legal grey area. This should end soon, thanks to an unmarried couple's landmark High Court battle.
Barry Stack, 51, appealed to the House of Lords after Dehra Dowden, 48, his former partner and the mother of his four children, was awarded the majority of proceeds from the sale of their �770,000 home in Willesden, North-West London.
The couple started living together in 1983, in a house bought in Dowden's name using her savings. They split in 2002 and were unable to agree on who should get what from the sale of their final property. A county court awarded them a half share each but Dowden argued that she had paid the majority of their housing costs since 1983. The Appeal Court increased her share to 65 per cent. Now Stack has taken the case to the House of Lords.
The Law Lords' decision is expected to set a precedent for thousands of cohabiting couples and the growing numbers of friends, family and strangers who have pooled resources to buy a home.
What is clear is that if you are cohabiting and intend to buy property together, you should instruct a solicitor to draw up a Declaration of Trust, or at least draw up a Cohabitation Agreement yourselves.
What is a Declaration of Trust?
There are two ways to jointly own a property: as joint tenants or tenants in common. Joint Tenants own the whole of a property in equal shares: if there is a split, each party receives 50 per cent of the proceeds. If one partner dies the whole house automatically becomes the sole property of the other. Tenants in Common, however, own separate shares of the house.
In either case, unless proper provision is made, the law says that by default, each party owns an equal share of a property.
A Declaration of Trust is a legally binding contract between joint property owners that sets out how the property will be owned. The aim is to avoid property disputes in the event of a relationship break-up or if problems arise between co-owners of a property.
What is in it?
You can make the document as simple or complex as you wish. Some co-habitants include a range of future scenarios - for example, failing to pay a share of the mortgage on time or, in the case of friends living together, someone having a partner to stay for extended periods.
The document must spell out the proportion of the property each unmarried partner receives if they break up. It should also set out the contributions each partner makes to the property.
A typical document includes:
Where do I get one?
You can get a Declaration of Trust drawn up by your solicitor. Ideally, each co-habitant would get separate legal advice, but the one document should suffice.
You should update your Declaration of Trust if the understanding between you changes over time. It can be challenged in court only on grounds of fraud and misrepresentation.
How much does it cost?
Typically, between £250 and £300.
Cohabitation Agreements
These documents cover some of the same ground as Declaration of Trusts, but are cheaper and more akin to pre-nuptial agreements as they can be drawn up and signed by the cohabitants themselves.
The law will respect these agreements if they produce a fair result for both partners in the event of a split, and if both parties were entirely honest when the agreement was signed. It's wise to get legal advice before drafting such a document.
Advice Now ( www.advicenow.org.uk) produces a free 'Living Together' agreement (applicable only in England and Wales). The document also includes a Parental Responsibility Agreement that makes provision for who looks after the children after a break-up.
Wills
If you do buy the house as 'tenants in common' it is vital that you both make a will at the same time. Otherwise one of you might end up homeless if the other dies.
Scotland
The Family Law (Scotland) Act 2006 attempted to iron out some of the problems faced by separating cohabitants. It introduced legal safeguards for cohabiting couples, to ensure the best interests of children are protected if these relationships break down.
