Cohabitation Reform: Planning Ahead as the Law Moves Closer to Change

Cohabitation law in England and Wales could be set for its biggest change in decades. While new legislation is unlikely before 2028, the Government's consultation, A Fairer End to Relationships, signals growing momentum for reform. If introduced, the changes could give qualifying unmarried couples new legal rights when relationships end or where one partner dies without a Will. Whether you are already living together or planning to, now is a good time to understand how the proposed reforms could affect you and whether a cohabitation agreement could help protect your interests.

Key takeaways

• The Government is considering reforms that could introduce new legal rights for qualifying cohabiting couples.
• Any changes are unlikely to take effect before 2028 but the direction of travel is becoming clearer.
• Current law does not give unmarried couples the same financial rights as married couples or civil partners.
• A cohabitation agreement remains one of the best ways to provide certainty and prepare for future legal changes.
• Existing agreements should be reviewed to ensure they remain suitable as the law develops.

This consultation is different in tone from its predecessors. While the precise scope of reform remains uncertain, there is a growing expectation that legislation will finally be enacted. Couples living together or planning to do so should therefore begin thinking about the implications for them.

The current position

At present, there is no single legal code governing the financial consequences of cohabitees separating. Contrary to the commonly held belief in the concept of a "common law marriage", cohabitants do not acquire the same legal rights as married couples or civil partners simply by living together.

Instead, disputes are resolved through a patchwork of legal principles, including property law, trusts and contract law. Unlike married couples separating, cohabitees are not entitled to forward looking discretionary awards of income, capital, property and pension rights based on factors such as ‘needs’, ‘incomes’, ‘health’ and ‘contributions’. Instead, remedies are backwards looking and are based on identifying what cohabitees agreed about shares in property or (if one party is the owner) an agreement to share coupled with a contribution by the non-owning cohabitee. For further information regarding the current position, please read our insight ‘Common Law Marriage in the UK: The Myth and Your Legal Rights Explained’.

Proposed changes to the current position

Parliament is unlikely to replicate the financial remedy regime on divorce because it would blur the legal distinction between marriage, civil partnership and cohabitation which successive governments have maintained.

Instead, any future legislation is likely to introduce a limited statutory scheme conferring defined rights upon qualifying cohabitants. Eligibility may depend on factors like:

• How long did the couple live together?
• Do they have dependent children?
• Are they financially interdependent?
• What contributions did they each make during the relationship?
• Have they chosen to opt out of any new legislation through a valid cohabitation agreement?

Eligible cohabitants are adults in long-term committed interdependent relationships who have lived together for three or more years, or who live together and share a child. Awards will be less than spouses in comparable financial situations will receive on divorce, with a starting point that each person keeps what they legally own, departing from that only to meet defined needs. The welfare of the couple’s children remains the first consideration. Discretionary needs are excluded to ensure cohabitants cannot achieve more favourable outcomes than divorcing spouses. Clean breaks (ending all future claims) should be achieved wherever possible, with maintenance limited to exceptional circumstances such as long-term health issues and wherever possible time limited. A two-year time limit from separation applies for bringing financial claims after separation.

Death without a Will and Opt-Out Provisions

The consultation also proposes extending rights to qualifying cohabitants to inherit automatically where their partner dies without a valid will, subject to meeting definition and minimum duration requirements. Cohabitants may opt out of their entitlement to the proposed remedies through agreements, provided some conditions are met, including the form of the agreement, financial disclosure, and independent legal advice. Existing legal remedies for cohabitees will continue. This means cohabitees’ rights to apply to the court for orders about jointly owned property or for a share of a former partner’s sole owned property (where a share was agreed and the non-owner relied on the agreement). Existing rights for former cohabitees to claim financial provision for their children from the other parent will also continue.

Why cohabitation agreements matter

In the absence of statutory protection, a well-drafted cohabitation agreement remains one of the most effective ways for couples to regulate their financial affairs. Couples can anticipate the changes proposed by the ongoing consultation by including provisions such as an agreed intention to ‘opt out’ of making claims for financial provision under any new legislation or requiring them to revisit the terms of the cohabitation agreement if there is any change in the law to ensure that their arrangements remain binding. Given that the changes involve introducing discretionary awards to separating cohabitees, agreements should also now include a financial disclosure from each party to ensure that each understands what they are retaining/giving up.

As a matter of best practice, such agreements should be executed as deeds, removing the need to establish consideration, and should expressly record the parties' intention that the agreement be legally binding.

Although there is currently no prescribed framework for cohabitation agreements, many of the safeguards developed by the courts in relation to pre-nuptial agreements are equally prudent. Independent legal advice, full and frank financial disclosure and careful drafting can all strengthen the enforceability of an agreement and reduce the likelihood of future disputes.

The government proposes to introduce further changes to the current legislation, which may have an impact on cohabitating couples:

Qualifying Nuptial Agreements (QNA’s)

The Government proposes introducing binding QNAs with important safeguards to protect against coercive behaviour, whilst giving couples more rights to decide arrangements for themselves. Required safeguards include signed and witnessed agreements, completion at least 28 days before the wedding, financial disclosure from both parties, and independent legal advice. A QNA must also, as a minimum requirement, meet the needs of the parties and their children. Where a QNA is challenged for not meeting needs, those needs would be assessed on a narrower basis similar to cohabitants, excluding discretionary spending needs.

Looking ahead

The consultation does not provide definitive answers on what the final legislation will look like, and reform is unlikely to take effect before 2028. Nevertheless, after many years of policy discussions, consultations and recommendations, there is a genuine prospect that this Parliament will introduce meaningful legal protections for cohabitants.

For couples who are planning to move in together, waiting for legislative reform may not be the best course. A cohabitation agreement can provide certainty over property ownership, financial contributions and other practical arrangements; while also placing both parties in a stronger position should the law change in the coming years.

The consultation serves as a timely reminder that cohabitation is increasingly recognised as an important area for legal reform. While the detail remains to be seen, individuals entering into cohabiting relationships should be aware that change is on the horizon and take advice now to ensure that their arrangements reflect both the current law and the direction in which it is likely to develop.

How can Tozers help?

Our specialist Family team advises individuals and couples on every aspect of cohabitation, from preparing bespoke cohabitation agreements and Declarations of Trust to advising on property ownership, financial arrangements, Wills and relationship planning. We can also review existing agreements to ensure they remain effective in light of your changing circumstances and any future legal reforms.

If you are living with a partner, planning to move in together or would like to review your current arrangements, our experienced solicitors are here to help. Get in touch to arrange a confidential discussion with a member of our Family team.

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