You keep the house…

Relationship breakdown leads to living apart. That means funding two homes, on the same budget as before, and each new home will be less expensive than the former home. Children want to stay in the family home, which helps provide stability over schools, local friends, and after-school activities. Can the present home be retained for a while?

In July 2010, Mr and Mrs Birch decided she and the children should stay in the home for now. They agreed she would try to get him released from the mortgage. If she had not succeeded by September 2012, she undertook to the court to sell the house so that there would be no continuing liability. Meanwhile she promised to pay the mortgage.

By November 2011, Mrs Birch realised she was not going to be able to take over the mortgage. She did not want to sell so applied to court to “vary her undertaking” – in reality to release her from her undertaking and replace it with another giving her until August 2019, their son’s 18th birthday. Mr Birch objected. He said the court had no power to vary an undertaking which amounted to an order for sale.

Mr Birch succeeded both at first instance and in the Court of Appeal. In the Supreme Court, he lost. The judgment in Birch v Birch [2017] UKSC 53 of five justices, two of whom are family law specialists, was that this undertaking was equivalent to an order for sale under section 24A of the Matrimonial Causes Act 1973 (MCA).

The case was sent back to the High Court for an enquiry under section 31(7) of the MCA where the first consideration is the welfare of the two children, although this could be outweighed by other factors. These would include whether Mrs Birch could establish a change of circumstances since 2010. Even if she could, what was the impact on Mr Birch? Was he going to suffer unfairly as a result of a delay in selling the home? If so, was there a compromise for him to wait for his money but be entitled to a share of the sale proceeds (which was not part of the 2010 deal)?

Housing affordability

Affordability of housing is a very real issue affecting divorcing couples. Rents and house prices rise faster than income. If Mr Birch’s name has to stay on the mortgage for another two years, he will face some real difficulties in meeting his own housing need:

• Getting another mortgage meanwhile: Since April 2014, the Mortgage Market Review has obliged lenders to take all outgoings into account if considering offering a mortgage. While Mrs Birch has promised to pay the outgoings, including the mortgage on the family home, Mr Birch will have to pay if she defaults.

• Extra stamp duty if he does buy a new home: Since 1 April 2016, those who already own a property will face an additional 3 per cent stamp duty land tax (SDLT) on the purchase of their second property.

It is likely that the agreement reached by Mr and Mrs Birch in 2010 will no longer be so attractive to the spouse who moves out. An order for sale in the near future is a better deal for him/her.

Change of circumstances

Mrs Birch’s success depends on demonstrating a significant change of circumstances. Is her problem over release from the mortgage enough?

• The changes in house and rental prices are the same for both Mr and Mrs Birch.

• She won’t face the extra SDLT on buying a new home as it will be her only home.

• The children’s ages and their attachment to their local community have not changed.

• But she will face stricter mortgage lending rules. Is it therefore fairer for her to keep the house until their son is 18, when she may reasonably be able to rehouse in a smaller home, with a cheaper mortgage?

One of the real benefits of the breadth of discretion in the MCA is that judges can bring to each case knowledge of issues such as the current cost of rehousing. Family law is a fast-moving area.

Hazel Wright is a partner at Hunters Solicitors

@HuntersLaw www.hunters-solicitors.co.uk