What are the current legal rights for cohabiting couples in England?
Unlike married couples, cohabiting couples are only able to make claims in respect of property ownership. These claims are governed by the Trusts of Land and Appointment of Trustees Act 1996 rather than a specific 'cohabitation' law.
If the couple live together in a property owned by only one of them, the other may be able to make a claim against that property by stating they have a "beneficial interest" in it. A beneficial interest is usually demonstrated by the non-owner making financial contributions towards the property, or by showing that there was a shared understanding about the "true" ownership which is different to what the title says.
What are the current legal rights for cohabiting couples in Scotland?
Since 2006, cohabitants in Scotland have had the right to make financial claims in court after the relationship ends. These claims are much more limited than financial claims available to married couples on divorce.
In cohabitation cases, the Scottish court can only order a payment of money. It can’t order that an asset, such as a pension or a share of a house, be transferred from one person to the other.
The legal basis for justifying this kind of claim is complex. The basic principle is balancing out any economic advantages or disadvantages incurred during the relationship. Interpreting this, though, has been difficult for the courts. One Supreme Court case has stated that the right approach is “fair compensation on a rough and ready basis”.
There is also a strict time limit of one year from separation to make these financial claims.
What about when unmarried couples have children?
Unmarried couples across the UK (in both England and Scotland) can make claims for child maintenance. Child maintenance is governed for all parents across the UK (married or unmarried) by the Child Maintenance Service (CMS), rather than the court. The amount is calculated based on the paying parent's income and is not influenced by the receiving parent's income. The amount paid is adjusted depending on how many overnights the child spends with the paying parent. Daytime-only contact does not count in reducing the amount payable. To find out how much child maintenance is payable, the CMS has an online calculator for parents to use.
For English couples, there is also the option of a claim to court under Schedule 1 of the Children Act 1989. This allows a parent to make an application for financial provision for the benefit of children. The English Family Court is able to make financial orders including orders for a "top up" in child maintenance (where the paying parent exceeds the CMS earning limit of £156,000 gross per year), a lump sum order or property arrangements. In order to make these orders, the court must consider each parent's income and resources and the needs of the children. The English Consultation Paper notes that this claim is rarely used in practice: only 285 applications were made in 2022 compared to 119,700 child maintenance applications in the same period.
What are the proposals for reform in England?
The Consultation Paper proposes new rights (and accompanying responsibilities) for cohabiting couples in England.
A summary of these proposals is as follows:
- Couples who have lived together for at least 3 years or share children would be eligible to make a claim.
- A financial claim would have to be filed within 2 years of the end of the relationship.
- The English Court would have wide powers in relation to what can be ordered, including transfers of property, lump sums and pension sharing. Maintenance orders may also be considered in exceptional circumstances.
- The Consultation Paper rejected a "compensation" style approach for the new law, which would have been much more similar to the current law in Scotland. Instead, what is proposed is that the guiding principle for determining the outcomes when cohabiting couples separate should be "needs". Unlike married couples, this would be focused on meeting essential needs, rather than including discretionary or luxury items. Another difference from married couples is that there would be no starting assumption of a 50:50 split of relationship assets.
- The Consultation Paper emphasised that these proposals maintained a clear distinction between financial claims for cohabitants and married couples. However, the reality is that for very many married couples in England, financial provision on divorce is determined based on "needs", rather than equal sharing of assets. The distinction may therefore be less clear than is suggested.
What are the proposals for reform in Scotland?
The Scottish Law Commission has recently proposed reform to cohabitation law in Scotland, which can be summarised as follows:
- A clearer definition of "cohabitant". Unlike in England, there is no minimum qualifying period for this.
- A clearer test for a financial claim, but still mainly based around economic advantage and disadvantage.
- The ability to make an order for property transfer as well as a capital sum (but no pension sharing).
- Possible orders for interim payments over 6 months, in cases of severe hardship.
- Some flexibility in the one-year time limit, but with an absolute deadline of two years from separation.
Which set of reforms would be better for cohabiting couples?
While provisions for cohabitants have been in place in Scotland for two decades now, the proposals for Scottish reform are much more restricted than the recent proposals in England. At present, cohabitants have a specific claim in the Scottish court, which is not available in England. However, if both sets of reforms go through, the disparity between Scottish and English cohabitants will continue, but in reverse. The potential outcome for cohabitants making claims in England will be much more generous than the equivalent in Scotland. Indeed, in some circumstances, the financial outcome for a cohabitant making a claim in England may be more generous than a spouse's claim on divorce in Scotland.
When will new laws for cohabiting couples come into effect?
In England, there is certainly considerable impetus behind the Consultation Paper and reforms may proceed apace. In Scotland, the likely timetable is less clear. However, with both Parliaments, political priorities and timetables may quickly shift.
If you require legal advice on how the current law and anticipated reforms may affect you, our legal experts at Morton Fraser MacRoberts are here to help. We are uniquely placed to advise on both English and Scottish law with regard to separation and divorce. Contact our Family Law Team to arrange an initial consultation.
