Unmarried couples who separate moved a step closer to acquiring the “divorce rights” of married couples yesterday with a House of Lords ruling that they can win a half-share in their joint home.

The landmark ruling, which affects up to two million cohabiting couples, means that where a couple own a house jointly, the presumption is that they own it equally.

Until now, even where unmarried partners own a house in joint names, the law does not assume each is entitled to half. Instead they must resort to costly court battles to argue for their share.

The ruling, made by a majority of law lords, means that when unmarried couples split up, courts will use an “equality yardstick” as the starting point when it comes to dividing the value of a jointly owned home.

The law lords also gave a stark warning that unmarried couples could find that they lose any assets in the legal costs spent in sorting out who gets what.

Courts will also look at factors such as how much each party put into the relationship and work out whether a case is “unusual” enough to fall outside a 50-50 split of assets.

If a property remains in one person’s sole name, the other still has to go to court to argue for his or her share, they said.

Lawyers urged couples to enter into legal agreements from the outset as a safeguard – or risk costly court hearings to determine who gets what, as in yesterday’s case.

The test ruling involved a couple who lived together for 20 years and is the first on how unmarried couples should divide their assets to come before the House of Lords.

But it brought no joy to Barry Stack, 51, who had challenged a Court of Appeal decision that his former partner, Dehra Dowden, 49, should keep 65 per cent of the proceeds from the sale of their £770,000 home in North London.

The law lords said that Ms Dowden should keep the 65 per cent because she had made the greater financial contribution.

The couple, who have four children, lived together for 20 years. Throughout the relationship, Ms Dowden, an electrical engineer, earned more than Mr Stack, a freelance builder.

The couple moved in together in 1983 in a house in Kensal Green, bought in Ms Dowden’s name for £30,000 that she paid from her savings and a mortgage in her name.

Ten years later they bought a property in Willesden Green in both their names for £190,000, using £66,000 from the sale of their previous home, a £65,000 mortgage and £59,000 in savings. However, in October 2002 the relationship broke down and Mr Stack moved out. He then won a court order that he was entitled to half the proceeds of the house, worth £770,000.

Ms Dowden appealed and obtained a ruling entitling her to at least 65 per cent of the proceeds.

In a statement to the court she said: “All the money was mine. I earned it from working hard at my job.”

Baroness Hale of Richmond said yesterday that the presumption of equal ownership should apply “unless the facts are very unusual”.

Francis Wilkinson, a barrister with Field Court Chambers, who acted for Mr Stack, said that the ruling should bring clarity so unmarried couples do not have to resort to court so often to sort out their assets.

“If nothing else, it should give encouragement to all couples buying a home together without marriage or civil partnership to state clearly, either on the Land Registry transfer form or on a separate deed, the shares in which they own their new home.

“The legal costs of those are insignificant compared with the costs of going to court to sort it out later.”

The law on rights for unmarried couples is under review and the Law Commission, the Government’s law reform watchdog, is expected to recommend that unmarried couples who have been together for two years should be given a “gateway” to legal rights, including a share in the property, maintenance payments and even a share of their partner’s pension when they split up.

Splitting up

Two million couples are living together

The number of cohabitating households is predicted to grow from one in six to one in four by 2031

Six out of ten cohabitating couples mistakenly believe that they have legal rights as “common-law husband and wife”

No current clear laws exist on how their assets should be divided on separation

Legal terms such as “proprietary estoppel” and “constructive trusts” make the law hard to understand

40 per cent of all children are born out of wedlock

Source: Resolution

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