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A guide to cohabitation agreements

Sep 30, 2025
A guide to couple's finances and why you need a cohabitation agreement
Saving for a deposit and buying a new home is an exciting time for any couple. To make things run smoothly, consider creating a cohabitation agreement. This acts as a legal document between unmarried couples who live together, outlining financial arrangements should you separate.
 
Read on to find out more about cohabitation agreements and why they’re beneficial, and get expert advice on couples’ finances from Elizabeth Jones, a family lawyer from Parfitt Cresswell.
 

What is a cohabitation agreement?

A cohabitation agreement creates a legal framework which sets a solid foundation for a couple’s finances in their new home. If you live with a partner but are not married, a cohabitation agreement acts as a safety net against costly court proceedings if future disputes arise. 
 

Who needs a cohabitation agreement?

Anyone living with a partner outside of marriage, or living with friends, should have a cohabitation agreement. 
 
Elizabeth said: “I would recommend a cohabitation agreement to anyone who is planning to live with someone or share living expenses. Not implementing a cohabitation agreement could lead to uncertainty over ownership of property and belongings, which can be very stressful and expensive to resolve via the courts.”
 

What they cover and why they matter

There are some key points a cohabitation agreement should cover to protect a couple’s finances:
  • How each party contributed to the home you bought and how the deposit was funded
  • The financial arrangements you have while living together (e.g. if one person will pay more towards rent, mortgage or bills than the other) 
  • How your home should be divided if you sell
 
Elizabeth recommends including the following in your cohabitation agreement: 
  • Evidence of personal finances 
  • Whether the property will be held in fixed shares
  • Buy-out clauses 
  • Pensions 
 

How many people cohabit in the UK?

According to ONS data, 61.3% of the population aged 16+ live with a legal partner or cohabit with friends or family members. The proportion cohabiting as a couple increased from 19.7% in 2012 to 22.7% in 2022 – that’s 5.4 million people in 2012 and 6.8 million people in 2022.
 
Barratt London surveyed 500 British adults and found that:
  • More than half (61%) had never heard of a cohabitation agreement
  • One in four (25%) were unaware that unmarried couples do not have as many rights around property and finance as married couples
  • One in three people in a relationship but not married (32%) did not know that they had fewer rights around property and finance than a married couple
 
Barratt London asked what situations people would consider a cohabitation agreement for:

 

   Renting  Buying
 With friends  35% 35% 
 With family   29% 25% 
 With a partner  47% 43% 
 
 

The benefits of cohabitation agreements 

In England and Wales, couples who live together do not have the same automatic rights as married couples.  
 
A cohabitation agreement offers financial security to couples. Benefits include legal protection, financial clarity and general peace of mind in the event of separation or illness. It also encourages communication on finances, which may help when saving to buy a home. 
 
Elizabeth said: “The pros of a cohabitation agreement are that it gives both parties clarity and peace of mind. It can avoid costly and unpredictable court proceedings by declaring how the property, furniture and effects will be owned and maintained.”
 

Who can help you with a cohabitation agreement?

Solicitors oversee the cohabitation agreement process. Each partner requires independent legal representation. One partner presents the agreement, and the other is asked to agree to it. 
 
A high-street solicitor specialising in family law, the Solicitors Regulation Authority (SRA) or your New Homes Mortgage Adviser (NHMA) will likely be able to advise. 
 
Make sure to compare costs to find a solicitor that’s suitable for you. A fixed fee with all the legal work required may cost around £900, including VAT.
 

When to refresh a cohabitation agreement

A couple’s finances and cohabitation agreement will need to be revisited if either of you: 
  • Becomes seriously ill or disabled
  • Loses their job or faces a drop in income
  • Receives a large inheritance
You will also need to refresh the agreement if you have a child together or decide to get married. 
 

How to plan your finances as a couple

Financial planning as a couple opens doors to saving for a house and larger purchases. There are a few different ways you can achieve this.
 

Talk about money openly

Setting financial goals starts by talking openly about finances. Re-payments like loans or other forms of debt are important things to flag so they can be planned into your budget. 
 
Other larger purchases can also be worked into your financial goals. Whether that is furniture for your existing property or saving for a deposit, it is vital to be open and realistic about these costs. 

Save for a deposit together

Saving for a deposit as a couple is a great way to stay motivated. Even if you choose to keep separate bank accounts, it’s important to get into the habit of saving together. 
 
First, work out the amount. Agree on how much you can both afford to put away each month, especially if one of you earns more than the other. Decide how long it will take to meet your goal and set a timeframe estimate.  
 
Then take time to research the best savings accounts and schemes for you, not forgetting Government-backed incentives, like a Lifetime ISA.  
 

Consider opening a joint bank account

Financial independence is beneficial for couples, but a joint account may be easier for shared expenses. For regular outgoings like rent, mortgage and bill payments, a joint account can come in handy.  
 
Couples may choose to have both a personal and a shared bank account for different types of spending. 
 

Find the best savings accounts

Got your eye on a high-interest savings account? You may need to hold a current account with the same bank, so put the necessary steps in place first. 
 
Banks and building societies often offer high initial interest rates on savings to tempt you in, then drop them after six months to a year. Don’t be afraid to switch to a new savings account if you find a better interest rate elsewhere. You could also switch to a current account with cashback rewards on utility bills and shopping.
 
 
This guide   to couples’ finances was produced in collaboration with L&C Mortgages, the UK’s largest fee-free mortgage broker and adviser.
 
Browse our new homes for sale in London and explore our homebuying offers to help you move. Call our Sales Advisers today to learn more.
 
 

 

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