Cohabiting couples: is reform on the horizon?

The legal position of cohabiting couples, who live together without getting married or entering into a civil partnership, has come back into the public eye following the Labour conference speech of Shadow Attorney General Emily Thornberry, Labour MP. Could 2024 be the year that we see cohabitation reform on the agenda?

Cohabitation is often mistakenly referred to as “common-law marriage”, popularising a misconception that living with a partner for a period of time confers legal and financial rights akin to marriage or civil partnership. This is incorrect, however: “common-law marriage” does not exist. This legal void affects around a fifth of couples in the UK, with cohabitees making up around 3.6 million couples. Yet there is a concerning lack of legal understanding, with 46 per cent of cohabiting couples in this country wrongly believing in the existence of a common-law marriage.

The current position

With a 144 per cent increase in the number of cohabiting couples over the last 25 years, there are concerns that the law in England and Wales has not developed in line with societal changes.

Under the current law it does not matter how long two people have lived together as a couple: unless they marry or enter into a civil partnership, they do not have the same financial claims as a married couple or civil partners. Regardless of the period of cohabitation, cohabitants will normally have only two possible heads of claim, neither of which arise from the relationship itself but stem from (1) property ownership, and (2) financial support for children:

1. A TOLATA claim (a claim under the Trusts of Land and Appointment of Trustees Act 1996) in respect of property. Such a claim depends on the cohabitant being able to demonstrate a beneficial interest in a property or a greater beneficial interest in a property than would otherwise be assumed from the legal title. The court effectively declares the cohabitants’ existing beneficial interests in the property and makes consequential orders, for example, for a sale of the property. It may also be possible to rely on proprietary estoppel in addition to, or as an alternative to, a claim under TOLATA, which is founded on the principle that it would be unconscionable for the registered owner of a property not to give effect to a promise. This is a complex area of law which can result in unfair outcomes.
2. Claims under Schedule 1 of the Children Act 1989 for financial orders for the benefit of a child / children including orders for periodical payments / secured periodical payments for the benefit of the child / children, limited lump sum payments for the benefit of the child / children and settlement / transfer of property for the benefit of a child / children. There is no provision for periodical payments akin to spousal maintenance. However, periodical payments for the benefit of the child / children can include the expenses of the parent’s household to the extent that the parent cannot cover or contribute to those expenses from their own means. The principle is that it is permissible to support the child by supporting the parent. However, such an award cannot meet expenses of the parent which are directly personal to them but have no reference to their role as carer of the child.
   
   

The current legal position for cohabitating couples can leave one party at a significant disadvantage and vulnerable on separation. While Emily Thornberry presented female cohabitants as disproportionately affected, the lack of cohabitation reform is an issue which affects all kinds of unmarried same-sex and different-sex couples. For example, cohabitees who sacrifice their earning capacity to take on the role of homemaker and / or interrupt their career to care for children can be left vulnerable and at a significant disadvantage on separation. Cohabitants who contribute equally to the family finances can also be adversely affected; for example, if one cohabitant pays the mortgage of a property held in their sole name and the other meets all household expenses, the latter may be left unprotected in the event of a breakdown of their relationship.

Cohabitants do not have the full menu of financial claims which are available to married couples and civil partners. For example, a cohabitant cannot apply to the court for a pension sharing order to divide pension assets. This can lead to one party being significantly disadvantaged at the time of retirement and foster the gender pensions gap.

There are also succession implications, since cohabiting partners are not entitled to the same Inheritance Tax, Capital Gains Tax and Stamp Duty Land Tax reliefs as married couples and civil partners. A spouse’s estate will automatically pass to their surviving spouse if they die intestate under the doctrine of survivorship, but the same protection is not afforded to cohabiting couples.

Further, a married father will automatically acquire “parental responsibility” (the rights, duties, powers, responsibilities and authority of a parent in relation to a child) on the birth of a child, whereas a cohabiting father will not acquire parental responsibility unless he is registered on the birth certificate or enters into a parental responsibility agreement.

Proposed reforms

The House of Commons Women and Equalities Committee published its report on cohabiting partners in August 2022, recommending reform of cohabitation law to prevent a “growing number of cohabitants and children [being left] vulnerable”, which was rejected by the Government. However, Emily Thornberry has used her speech to pledge reform which has put the rights of cohabitants back in the spotlight and on the agenda.

While Emily Thornberry has indicated that Labour is committed to reforming the law on cohabitation, it is unclear at present exactly what the reform would entail. It may be that any reform would create a de facto legal relationship status after unmarried couples have cohabited for a certain period of time, similar to the position in Australia and New Zealand.

While legislative reform still feels some way off, there are steps that cohabiting couples can take to protect themselves:

• Cohabitants should consider putting Wills in place and taking out life insurance policies.
• Ensuring that both parties are named on the legal title to a relevant property can be an important safeguard.
• Cohabitants may wish to consider entering into a declaration of trust, for example in circumstances where a jointly owned property is held in unequal shares or a party is not a registered legal owner.
• It will also be important for cohabitants to consider entering into a cohabitation agreement, recording their financial and living arrangements both during cohabitation and on separation.
  
  

It will therefore be important for cohabitants to take specialist legal advice in order to protect their position to the greatest extent possible under the current law.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, January 2024