Bethany Davies is a Solicitor at Evolve Family Law based in Whitefield, and shares some advice on separation.
We were going to title this article ‘separating in a hot property market’but by tomorrow that may be out of date. One thing is certain; no one really knows where the property market is heading. Some estate agents say gazumping is a fleeting phenomenon created by the temporary stamp duty holiday.
Others see property price increases as a vindication of Brexit and the UK’s economic confidence, or an unstoppable ‘race for space’ (gardens and home offices) which was started by the pandemic. They are of the school of thought that ‘the only way is up.’
Divorce solicitors aren’t property experts and aren’t qualified to predict the property market. Estate agents and journalists admit they can’t guarantee where the property market is heading. It only takes a read of the newspapers to realise there’s a wide divergence of opinion on where UK property prices will end up.
In an uncertain property market, many families choose to stay put, but that situation comes under pressure if you’ve separated.
Protecting yourself when separating in an uncertain property market
Our tips are:
• Explore all options before putting your house on the market as whilst the property may sell quickly there may be nothing on the market you can afford to buy.
• Think about whether you can afford to stay in the home or move to another property. An independent mortgage advisor can help you to work out what your options are.
• If one of you is buying the other out, make sure the property is accurately valued to reflect current property prices, but watch out for estate agents’ aspirational asking prices!
• If you are selling be careful about agreeing to pay out or receive fixed amounts of money from the proceeds of sale. Go for percentages instead, so that you both share in the risk of a price reduction or the reward of a price increase.
• A sale of the property in a few years’ time (such as when the youngest child leaves education) may be the answer. That can be achieved in certain circumstances, but there is a lot to think about with this kind of arrangement, such as who pays the mortgage and any repaid or improvement costs in the meantime and how the equity is going to be split when the ‘trigger’ point is reached. There can also be complications with capital gains tax.
Whatever property solution is best for you, it is vital that you get early legal advice and that any deal you strike is recorded in a court order or a proper contract. That way you have security if things don’t go to plan in the uncertain property market.
For separation advice call Evolve Family Law on 0345 222 8 222. Appointments at our Whitefield office or by telephone or video.
By Bethany Davies