Adequately housed? Financial agreement & needs in divorce

[TrickyExHelp]

Hi - was hoping you could help with a query.

STBXH left the matrimonial home over 3 years ago and has been renting the same 3 bed house ever since. He has our 2 kids there every other weekend and 50% of school hols. Despite renting it, my ex has decorated/furnished the house to make a nice home for the kids during their time at his.

As he has been ‘adequately housed’ for over 3yrs, will this have an impact on our financial agreement? We’re due to start mediation for finances in March. My ex earns significantly more than I do (£20,000+) and has significantly more savings.

I live in the matrimonial house with the kids (pay the full mortgage - he pays child maintenance). The value of the house has risen astronomically since we bought it 10yrs ago (nearly £200,000) because it’s in an ‘up and coming’ area. Having to buy him out of 50% of the house is doable with help from family and an extended mortgage but the additional mortgage payments will leave me extremely tight each month. Even a 40/60 split of the house value in my favour will be painful.

Would I be able to get something like a 25/75 split in my favour when the circumstances provided above are taken into consideration? He doesn’t ‘need’ the money from
the house - he’s adequately housed and has significantly more money than me. If he wants to buy, he’s got the savings to make a big deposit and a salary to get a big mortgage - he’ll have no trouble buying a 3 bed house and he already has his own furniture (his rented house came unfurnished - he’s furnished the house himself).

Thanks

What about pensions? Could you offset equity with pension?

Could you sell house and move to a slightly cheaper area?

I was in a similar situation. I had to sell and move to a cheaper area/smaller house.

For you to be adequately housed does not mess staying in the same home.

All savings and assist's are taken into consideration. I had more cash, my ex kept his the majority of his pension.

*mean

He is due a share of his assets. Why would he only get 25%? He is renting and paying for that while his investment ( is capital) is tied up in a joint asset which you have sole benefit of. So yes you’re paying the mortgage but he’s having to pay rent elsewhere.

20k salary gap is not significant In terms of mortgage esp if he’s paying maintenance.

you should be much closer to 50% share if all assets inc any savings but you may need to sell to give him has rightful share.

Best you can probably hope for imo Is 60:40 split if your kids are young (probably also more likely if you work part time).

But do consider whole pot of marital assets if medium to long marriage- so equity in house, pensions and savings prior to split. So you may be able to try arguing for 60 % of pot. Doesn’t mean you will necessarily get it though.

A lot is down to negotiation. What does your solicitor say is likely?

Thanks for all the replies so far. Moving isn’t a solution unfortunately as everything in the local area has also risen astronomically. As I said, I can just about afford to keep the house but it’ll be tight each month.

in terms of other assets, he has much more in savings/shares than me (over £100,000). In terms of pensions, we’ve both worked full-time and got married at the start of our careers (met at uni) so I’m guessing we’ll just be keeping our own pensions.

Perhaps my understanding of ‘fairness’ and ‘needs’ in financial agreement is incorrect, but surely it can’t be right that I’ll be struggling while he gets £100,000+ equity in cash and currently has more than enough to buy a house (his mortgage is likely to be cheaper than the rent he pays) without a single extra penny from the divorce.

Why is only the house joint if you've been married a long time and there are other savings etc....

You say about keeping own pensions but if you came into the marriage roughly equal, then why aren't you including those savings etc in the joint assets?

Thanks - we haven’t yet started mediation (due to start next month). I’m aware that everything goes into the pot (inc pensions) and that it’s possible to offset savings/pensions against the share of the house when there are disparities.

I focused on the house in my original post because that’s the asset that we both know the value of. Still gathering financial info for the disclosure - I haven’t seen his exact savings/shares yet (but I know he has much more than I do). Our pension cetv amounts are likely to be roughly similar (I think!) as although he earns more than me, he’s in the private sector and I’m in the public sector.

If he has that much in savings maybe you'll get to keep the house

It's in your interest to draw this process out as he is building savings every month

You can't look at one asset in isolation in terms of what's fair. 75% of the house equity plus keeping own pensions with him getting 25% house plus 100% of savings could be a very different % split to 25/75. You need a better idea of the total value of marital assets and debts. Then if you have savings as well he won't be getting 100% of savings. If you can give an estimate of all assets and debts you'll get a more meaningful. The question is pointless without the rest of the information.

He doesn’t get to kept his 100k

you need to both declare your pensions
all savings
equity

then you can work out an overall split ( which is likely to be 50:50 based on limited info here)

but then you can start offsetting - eg he keeps the cash but you get the equity, or both those are split and pensions are equalised etc

but you can’t look at house in isolation and he is due that in the pot as well.

It doesn't work like that.
All assets including pensions and savings (and debt) has to be declared,
You won't get 75% though and why should you?

@LaurieFairyCake intentionally drawing out a divorce usually results in things becoming acrimonious and is not generally a good idea.

Also savings post separation are no longer joint in any event.

Our pension cetv amounts are likely to be roughly similar (I think!) as although he earns more than me, he’s in the private sector and I’m in the public sector.

Unless he’s paid in huge amounts or massively out earned you for a sustained period then your public sector pension is likely to be much bigger than his private one. You need to get a valuation and include everything in the pot for splitting, especially the savings.

He definitely wouldn’t be classed as “adequately housed” in a rental, so I think you’ll be looking at a 60/40 split on a good day.

Thanks for your reply.

Just to check, why isn’t a rental (that he’s lived in for over 3yrs) classed as being adequately housed? Genuine question, not an attack 😊. He currently has a stable home for him and the kids when they stay with him. Some people rent for their entire lives.

In addition, my ex earns at least £20,000 per year more than me. Is that likely to equalise our pension cetvs?

Unfortunately from what I know, your ex having higher earnings is unlikely to have anything to do with it (galling I know) (unless your ex is on over 100k a year forget anything like spousal maintenance or getting more due to that, it isn't really factored in).

You kind of have to let go of what he earns and thinking about it, outside of the above and any child maintenance, it's not part of the equation, it's a case of splitting up what was in the marital pot that is looked at.

He’s renting because all the equity is tied up in a house you’re living in. It’s very unfair to say you should be housed in a bought property while he must rent, that would not be classed as “adequate” in comparison to what you’d be getting as renting is notoriously unstable. Would you be happy to rent for the foreseeable future?

Very difficult to say re the 20k extra. If you earn 20k and he earns 40k then that might make some difference however if it’s more like 40k vs 60k or higher than unlikely. If you are currently part time there will likely be pressure to return full time and this could be argued that you’re able to increase your earnings.

He’s adequately housed in the sense that he doesn’t need to live in the fmh

BUT as stated, he’s due a fair share of the equity tied up in that asset which you have dole use of - and that may or may not require the house to be sold. Or when you look at the total
assets can start negotiating equity fir savings etc

as also said, 20k salary is not a big gap

yiu have to get cetv of both pensions, equity, savings in total to understand the pot

and you may find your pension is actually bigger than his …..

He’s due a fair share of the house equity. I’d expect your pension to be worth more than his if yours is public sector, so he may well get some of your pension.

You have not posted your ages or the sex of your kids, but you need to decide whether you value the house more than your pension.

If your family normally lives a long time then you need to have a good think.

Also be very careful arguing he is adequately housed as tomorrow his landlord could hand him a Section 21.

Is your argument going to be that renting is adequate housing? Because it seems that applies to him but not to you. Are you ok with renting and using your capital to do this ? Because that is what you are saying.

If you want to buy and that is the definition you both go for then it means you divide up the assets to achieve this. Right now by your definition he is t adequately housed. Having the children more of the time doesn’t increase your housing need. It’s the same as his.

Have you compared income as opposed to salaries, what can you both afford?

Everything gets declared and split. Most often 50-50. But the judge will consider what's in the best interests of the children if the equity in the house won't house them in two places.

It might mean your exh continues to have a portion of the equity in the marital home to come to him when the children are finished education. You're then expected to sell to release his equity or buy him out at this point if you can't buy him out with a mortgage right away.

There are lots of ways the judge might divide this up but it will be what is in the children's best interests first then fair to both parents second.

If your pensions are equal (they may not be though) and you both share the 200k equity in the house plus his 100k in savings that's a starting point of £150k each so you might need to raise another £50k to buy him out.

Are you sure he still has the £100k savings because the court only consider what is in accounts for the last 12 months. If this has been spent on rental/ holidays/ making a home then it's gone and doesn't go into the pot to divide up.

Thanks all. From your comments, I’m going to have to wait until the full financial disclosure is complete before I start to think about how the house will be split.

I think I previously misunderstood what ‘adequately housed’ means. I thought it meant that because he’s been living long-term (over 3yrs) in a stable rented home which is easily affordable for him (as opposed to living with his parents, living in a flat share, or sofa-hopping with friends), his housing needs are already covered and so his ‘needs’ from his share of the matrimonial home would be less.

Yes
that us not a correct assumption

I don’t think you’ve said what the equity is in your house?

take the sale price and deduct remaining mortgage, estate agent fees (say 1% + Vat), then deduct conveyancing fees (say £2500) and finally deduct any Early Repayment Charges that you have on the mortgage. This is your equity.

Find out:

Your respective CETVs (but be aware that the true value of your pension could be much higher than it first appears).

What it would cost to buy a reasonable house in your area including stamp duty?

Your respective mortgage capacities.

Your respective savings and the value of other assets such as shares.

It all goes in to a pot and you could aim to try and keep more of the house and offset this against other assets.

Hopefully he is very reasonable and agrees that it’s better for the children if they get to stay in the family home. Ultimately, for you to sell it and spend on stamp duty to get a worse house isn’t in their best interest if he’s also able to buy using whatever cash there is available and by maximising his borrowing. That’s if he chooses to buy instead of rent, not everyone is desperate to own.