Mortgage Squatting!

by Mark Johnston

Mortgage Squatting!

Until recently two average earning adults in there twenties could comfortably borrow enough money to buy a property but over the past few years, British house prices have risen far faster than earnings and inflation.

Deposits are also still a major problem for many first time buyers. A recent report by analysts Oxford Economics predicts that the average deposit for a first time buyer will reach around £100,000 by 2020.

However, in the last few first time buyers seem to have been swamped by a range of schemes such as the First Buy and Newbuy scheme, designed to help them on to the property ladder.

Michael Ossei, personal finance expert at Uswitch, a comparison website, says “the last year has seen a real shift in the mortgage market in favour of first time buyers”.

Some industry experts feel that while such schemes are very admirable the truth is that only two things can really help the current generation own property like their parents. Real wages must go up or house prices must fall.

Although overall it is now a better environment to buy a property when compared to just 2 years ago as deposits and mortgage rates have fallen thanks mostly to the funding for lending scheme.

However, new research has shown that a fifth of the first time buyer generation have now opted to ‘mortgage squat’.

The term ‘mortgage squat’ means renting from a partner by paying towards their mortgage and then not having any actual rights to the property.

Figures reveal that 98 per cent of those couples already ‘mortgage squatting’ were not married or in a civil partnership.

Some analysts suggest that many couples choose to opt for ‘mortgage squatting’ because if or when they do get married they will then have equal rights to the property.

Data shows that people who choose to do this contribute more than £5,000 a year or £135,100 over the life of the mortgage, which is a large amount considering they do not have any rights to the home.

Although few couples realise how risky their situation can be from a legal point of view. It may seem outdated, but unmarried couples are not protected by law in the same way that married couples or civil partners are.

It is worth noting that the common law marriage does not exist in law.

Christina Blacklaws, director of family law at the Co-operative legal services, states “mortgage squatters may incorrectly believe that because they are in a relationship they have some rights if things go wrong. Sadly, there is no law which protects people in these circumstances if they do not have legal agreements already in place”.

If a couple live together but only one of them owns the home, the non-owner has few rights, even if they have contributed to the mortgage. The actual home owner can therefore:

–       Evict without getting a court order

–       Rent or sell the property without consent

–       Take out a loan against the property without

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