What are your Property Options if you are getting Divorced

publication date: May 30, 2011
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

What are your Property Options if you are getting Divorced

Divorce - Sale of House

If you are currently in a relationship that has gone sour and you are finding it tough to live together, then now is probably the time to work out what to do with your property for the best.

There are various options and that depends on how much equity you have in your home:-

If you have a lot of equity in your home

If you own your home outright or have more than 40% equity in your home, then even in a poor property market, you should be able to sell your home and both be able to move on fairly quickly.

If you need to sell your property fast, then the best thing to do is to offer it for sale via a local estate agent or put it into an auction. To be assured of a sale within two months, you'll need to offer the property for sale at a discount of 10-15% (see how to quickly sell your property). The more competitive your property is marketed for sale, the more viewings you are likely to get and the more likely it is that you'll receive one or more offers. If you can get two buyers competing to buy your property, then it's possible you'll get a very good price for your property.

Another option is to put the property into an auction. This will allow you to set a base price for the property and if you don't get offers over and above this amount, it will be withdrawn from the auction. This doesn't mean it won't sell, as the auction house might receive other offers for the property after the auction day.

If you have less than 25% equity in your home

It might be that you have bought your property before 2005 and you don't have much equity in the home since the credit crunch. This makes the situation a lot more difficult when you want to sell your home, but it doesn't mean there aren't any other options.

For starters, if one of you can afford the mortgage payments while your partner could afford to move into rented accommodation, this would be an ideal situation until the economy and property prices recover.

Alternatively, depending on the type of home you have, it might be worth investigating whether you can ‘split' the property into two. This will partly depend on your relationship and how difficult the split is. But if it's not too bad, either temporarily or permanently splitting the property into two might be a solution that both of you could live with.

You would need to get a builder in to see what they could do and if considering a permanent split, speak to your planning office (for free) to see if it was possible to register the properties as two seperate homes if you intend to properly convert them into two homes.

If you have no or negative equity in your home

If you need to split and you own a property but have no or negative equity, then your options are quite limited, but there are still things that you can do.

It's possible for example to see how much you could rent the home out for. It might be you have to upgrade the property so it can be legally rented. If you are lucky, it might be you can rent the property out for more than it costs to run it and then you can both consider renting a property separately until the economy and prices recover.

If you do go for the rental option, then bear in mind you will either both or one of you have to declare which home is your main residence (owned or rented) as this has tax implications for both of you. If you then come to sell it and have declared the property as a main residence, despite the fact that you have rented out your property and earned an income from it, you can still claim tax relief on any of the equity you do secure following future price rises.


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