There’s an often-overlooked impact of couples splitting on the demand for housing and particularly for rentals as splits occur every year in the UK.
Reputedly peak divorce – Divorce Day – is the 6th of January and as every experienced landlord and letting agent will tell you, couples head for divorces after the Christmas and new year period, and in September when children go back to school. Demand for rentals for singles always peaks at these times.
But the cost of living crisis means that more divorcing couples stay living together longer.
When one household becomes two it doubles the accommodation requirements of a family. This may be temporary but demand for rentals, when one partner moves out, has traditionally been exceptionally high at these times of year.
Now however, according to research carried out by Legal & General and reported by The Times newspaper, financial concerns are leading to delays in couples splitting and seeking extra accommodation. These pressures it seems have delayed nearly 20 percent of divorces in the past five years.
The available evidence shows that people are staying in the marital or cohabiting home much longer due to financial considerations. Also, L&G found that more than 40 percent of divorcees felt that financial splits had not been equal and fair and that very few people considered pension pots when dividing assets.
The latest available statistics from the Office of National Statistics show that divorce rates in the UK have been falling for over 20 years but have taken a steeper decline in the last two or three years dropping to the lowest number of divorces at just 6 per 1,000, as the cost of living has soured. See the chart below.
The cost-of-living crisis goes on, while the housing crisis in the UK takes centre stage in the political arena and with the housing secretary Anela Rayner promising to build £1.5 million new homes during the tenure of the current Labour Government. Construction industry experts have cast doubt on her ability to hit this target.
The housing market has seen record high mortgage rates, a rental housing shortage and a general cost of living increase including rents, energy, food and clothing. These items have risen sharply in cost since Covid and Brexit as the country experienced high levels of general price inflation. The result is family tension, stress and arguments, a recipe for family splits and more divorcing couples.
The two factors together have their impact on rentals: first the affordability of rents, and this becomes even more critical when a couple becomes two singles, plus a dramatic increase in the demand for accommodation generally. In some locations rental vacancies are few and far between.
As well as a fight over who owns what: house, possessions, pets and children, couples must come to terms with two lots of separate living expenses, albeit perhaps a temporary situation.
Research shows that 17 percent of all divorces in the last five years were deferred because of money worries. This is largely because of rising living expenses and the cost of the divorce itself.
It was found that while 50 per cent considered the value of the family home when dividing assets, only 13% think about pensions, which L&G says leave “some at risk of hardship in later life”— especially if one partner had, for example, stayed at home to look after children, leaving them with a smaller retirement pot.
If the family is in a rental home, then that simplifies matters somewhat. But if the home is owned, on mortgage say, the couple must come to some agreement on how things are handled. Either the house is put up for sale and the mortgage paid off, with the equity that’s left divided between them. They could hang on to the home in joint names until a sale is made later, or less commonly one party may buy-out the other’s interest in the property and take on the mortgage.
Either way, at some point one of the couple is likely to need alternative accommodation, whether that’s buying a new home or renting.
Another approach, where children are involved, is, they stay in the family home and their parents rotate in and out of the house in turn. They will agree a set amount of time in the home, but it means they will need alternative living arrangements, perhaps staying with friends or renting, but this in turn raises issues with the legality of the tenancy unless both are on the agreement.
It is predicted that as the housing crisis continues, there will be more divorcing couples having to think of more creative solutions to their housing predicament.
For landlords taking on a divorcing single when they split can result in a successful tenancy, but these tenancies present uncertainty when the Renters’ Rights Bill becomes law. They are likely to be temporary but just how long will they stay?
Under the current tenancy regime, the minimum stay would usually be a 6-month tenancy agreement. This guarantees the landlord a minimum of six months and makes the letting worthwhile.
But what will happen when the Renters’ Rights Bill becomes law sometime later this year? Tenants will be able to leave with a two months’ notice from the start of the tenancy and it’s likely there will be no option to take any period of rent in advance beyond one month.
The Renters' Rights Bill will make all tenancies periodic, the Shorthold tenancy and Section n21 evictions go, there will be no fixed term or tenancy contract end date. Tenants will be able to end their tenancy by giving two months' notice. Landlords can end a tenancy by serving a Section 8 notice if they have a legal reason to do so.
Landlords must serve notice to tenants on the prescribed form with the required notice period using a specific ground. If a tenant doesn't leave, landlords must go to court and the onus is on the landlord to provide relevant evidence that the ground applies.
The ongoing housing crisis is making property decisions increasingly difficult for both landlords and tenants. Combined with affordability issues when a couple splits mean couples having to be creative as to how they survive financially. Living together is often the only option.
If they do decide to live apart the rental solution is often the only option. This is where the landlord is likely to have a difficult decision after the Bill becomes law. Any tenant signing a new agreement can walk away after two months.
Most tenants won’t do this because it costs them money to move, but someone leaving a partner is inevitably less settled and landlords are going to be wary about offering tenancies in these circumstances. Perhaps another example of an unintended consequence of the new law.
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