Divorce – What Happens If I Move Out Of The House?
The idea that “if I move out of the house I will lose all of my rights to it” is one of the great divorce myths. If you are thinking of moving out, however, there are some pitfalls to bear in mind:
Is it the right thing?
This is probably the answer that you know already. People generally only ever ask their solicitor, “is it okay to move out?” if there are strong reasons for taking the step and they know that the time has come to move out. Perhaps tensions in the home are great and carrying on living under the same roof is just too hard an ask. Perhaps being in the same home creates arguments which are affecting the children, or maybe this is simply the next step in the separation process.
For some people, moving out is a means of achieving psychological separation from their partner to give some head space to allow negotiations – fair negotiations – to have any chance of taking place at all.
Protection from dealings
When you occupy a house, the legal owner cannot sell it free of your claims. Of course, when you move out that protection may disappear. This won’t matter though if the house is already in joint names – it can’t be sold without your co-operation. If it is not in joint names, then you will need to register your rights to gain legal protection.
When you live in the home you can monitor and protect it. When you move out you may lose all control over how it is managed and looked after. Any potential losses may need to be weighed up and balanced against the benefits of separation.
Similarly, if the property is going to be sold, you will not be on hand to ensure that potential buyers see it looking at its best. These are all considerations to be thought through.
The mortgage and outgoings
In any event it would make sense to ensure that any mortgage company is aware of the situation so that no further draw-downs on the mortgage borrowing are permitted.
Beyond this, of course, you will need to think about whether there are safe arrangements to ensure that the mortgage and any outgoings continue to be paid. And this takes us to:
Is it affordable?
At separation, most people have to think in terms of trading down from their current home – there simply isn’t enough money to go round for there to be two homes along the lines of what existed at the end of the marriage.
However, until that sale takes place, you are bound to be more financially-stretched than would otherwise be the case. You will need to think through all of the costs that will be involved in running two homes and consider how those costs can be met.
Many people decide that the separation is so important that the step needs to be taken, even if the new property means dipping into savings to meet the running costs. And this takes us to:
Process and taking these steps by agreement
If you do not have control over the finances, then clearly there needs to be an agreement in place to enable the new home to be funded whilst long term arrangements are reached. There is an awful lot to consider and you are likely to find that negotiating the different aspects through solicitors’ correspondence will be an extraordinarily expensive and time consuming way of going about this task.
It will usually make sense to sit down and grind through these issues either at the kitchen table, in mediation, collaboration or around a ‘round’ table – either way, an opportunity to exchange views immediately will be important.
The process of establishing a new home is an expensive one:
- there may be removals,
- there may be deposits to pay,
- there will be connection fees and so on long before there is any question of meeting the monthly costs.
Think too about the period of rental and whether any break clauses are appropriate.
Ideally, all of this should be discussed and managed carefully so that there is “buy-in” from the left behind spouse. Where it is done unilaterally, and the case then proceeds to court, you may face criticism for having squandered assets through establishing second households at a time when it was viable to remain in one (this often is not the case but it is worthwhile trying to proceed with care so that you can avoid the argument).
…and if you are buying
Even more thought may be needed here as the wider case may begin to have an impact.
- Often, a key component for the court when it comes to dividing assets is to assess needs.
- If you have volunteered to purchase a pretty modest property, set against the asset base, then do not be surprised if you face a barrage of objections later when you try to present an argument that the modest property is insufficient for your needs (“well why did you choose it then?”). Clearly this needs careful thought.
- Alternatively, if you purchase a very lavish property then first beware of the impact this may have on the overall financial viability but also bear in mind that it may be hard for you to argue a case that the left behind spouse should then move forward and re-accommodate themselves economically (“if this house is good enough for you, then why should we be managing on so much less?”).
- It does not mean that the move should not take place – just that a clear strategic approach is needed.
Our experience of moving out is that it is pretty hard to go back. The home becomes morally the space ‘owned by’ the left behind spouse. It is not that they own the value of the property, it’s just that it is ‘their place’ and it becomes increasingly hard for you to assert rights to go back, to enjoy it and indeed to use the contents.
It is our general strong recommendation that:
- You take with you all your personal effects;
- If you cannot, then you put them into storage; or
- (if it can be done by agreement and feels safe) that storage costs are avoided by boxing up your things and storing them safely somewhere in the home, for you to receive at a later stage.
(Leave discussion about contents to the end of the list of things to decide at your peril).
Ideally you will also have agreed how to share out all of the contents in the longer term, even if those contents are left where they are so as to ensure that the property sells well on any eventual sale.
Some people adopt an alternative approach that works along the lines “well that’s one household fully equipped which we can treat as yours….I will now set out and equip my own place”. Where this is being done in a rough and ready way during the rental period, then there will be a capital need long term for equipping the final home – but don’t expect that the budget that you argue you need will go through without objection.
You will also decide, presumably, on an allocation of the cars if this is not already clear.
You may need to notify your insurer of changed circumstances so that your car insurance is not rendered invalid in case of a break-in (you may even manage to secure a discount on your current spend if you are moving to a lower cost area).
The wider case?
…and of course this act of separation is likely to have an impact as regards the negotiations. Some people have caused themselves pretty significant difficulties in negotiations by moving out.
- They carry on pressing for a sale of the house.
- However, from the left behind spouse’s perspective, progress looks pretty unattractive: this is the house that they love and when there is a sale the future home looks pretty horrible by comparison.
- What can happen instead is that the family meanders forward through negotiations that never really reach a conclusion because the option of moving out from a loved property seems so hard.
- In these circumstances, it may be best to reach an agreement that the left behind spouse will market the property. That may or may not be possible. The left behind spouse may or may not engage in the process with enthusiasm and efficiency. It will all depend on the circumstances.
Where separation is to enable a new relationship to advance, recognise that your moving in together is likely to make this a clear fixture in the matrimonial case so far as any needs based calculations are concerned.
Don’t forget to make arrangements for your post. A re-direction service may be a bit flawed and faulty – just look at the options and see what will work for the best. Notify important bodies who may be contacting you to ensure that your financial and formal documents etc are re-directed to your new address. This is a big undertaking. Assistance may be provided by the Royal Mail website.
Capital Gains Tax
This does need a bit of thought – but, with care, significant benefits can be secured.
- You don’t pay CGT on any periods of non-occupation after you leave for the first 9 months.
- If you were purchasing a new home at separation, it will probably make sense to notify the Inland Revenue that your new home is now your principal private residence…what that means is that the new home is protected from a CGT charge whilst the old home continues to be protected from your starting to clock up a liability for CGT because of the 9 months’ rule.
Notify the council tax authorities of your new home but ensure also that they are notified (assuming it is the case) that you are the only adult in occupation, so as to secure the single person discount.
Where appropriate, ensure that the left behind spouse notifies the council tax authorities too so as to secure a discount on the marital home.
Bills/bank accounts generally
It usually makes sense to ensure at separation that the bills in the family home pass across to the person remaining in occupation. If you are going as far as that, then it probably also makes sense to think in a more global way about bank accounts and credit cards – might it be time to separate these out? Again, this is all something which should be done by way of agreement.
Wills/severance of joint tenancy/tax credits
Whilst this life-laundry is taking place it may be a chance to visit each of the above.
The one bit, however, that almost certainly needs very careful consideration before departure is the question of parenting. This will have already been considered in much more detail but, in brief, it would be an unusual situation in which separation out into two homes was completed without very careful thought being given to:
- how the children will make sense of this change; and
where they are younger;
- first, how the change can best be managed; and
- secondly, what arrangements will look like after the separation in terms of spending time with each parent to ensure relationships are able to build and grow as is needed.