Housing and Divorce in the UK

The slump has already hit Spain, France is beginning to feel it at the fringes, and loan rates are falling in the USA. But the property market in the UK is yet to stabilize.  

House prices in the UK have been rising steadily and steeply over the years. All such climbs are followed by stagnation, followed by a downward slump, no matter how small it is. House prices in the UK are rising four times faster than salary increases and are still at a point where it is difficult for the average wage earner to afford something comfortable easily. Divorce is one of the major factors influencing the market in this area. The high rate of divorce has given rise to fragmented families, consisting of children and one parent, or just a lone divorcee leaving alone (the ‘one-person family unit’). The affordability rate and the demands have been, in turn, affected by this.

The Facts and Figures  

The Office of National Statistics (ONS) divides home owners into two categories – those who live in rented accommodation – and those who have their own houses. According to these facts and figures, the worst-affected sector where housing is concerned can be divided into the following demographic groups:

  • There has been a great and disproportionate rise in the number divorcees living in rented accommodation. The rise has been particularly notable since the late ‘90s. The salaries of the people of Britain have also gone up, but the comparative hike does not tally. In other words, the prices of houses have risen faster and higher than the pay packets have. Therefore, a lot of people are opting for rented housing. Lone divorcees prefer rented accommodation as it gives them greater mobility, and lesser responsibility. It is also easier to process papers, and save costs, though on a short-term. The argument put forth is that the rent is lower than the monthly bank loan interest in many cases.
  • Another important group comprises of the poor home owners. These are people between the age group of 25 – 34, often belonging to ethnic minorities, and inadequately employed. The surveyors also noted that many of them are divorcees, especially single mothers with young and dependant children. Apparently, they had bought the house together with their spouses in happier times, hoping to enjoy and pay for it together. The idea behind this was that they would earn more as time went, and it would be easier to repay the bank loan. However, they are now stuck in a situation where they cannot earn up to their full potential because of the children who need time and care, or there is a big gap between the single and joint earnings. At any rate, this group is not helping the economy in any way. 
  • The third group comprises of the ‘drifters’, and is increasing in number. This consists of people who are still not above 35, and have been out of a marital or cohabiting relationship. They are childless, have a better financial standing than the other groups, but do not wish to settle down. Buying a house with a heavy loan would be a burden for them, and they would stay in a rented apartment only for a short period time. Most of them tend to change jobs relatively fast for better opportunities and change accommodations as they move along.  

Leaving the House 

When does one have to leave the house? Following a divorce, the assets and properties of the partners are divided between the two of them. There are several laws according to which the court decides who will get the house. It may be the parent who has custody of the children, or has been paying the loan instalments, or who has inherited the property. It may also come as part of the maintenance package. The financial implications of this situation can be far-reaching. The spouse who leaves the house has to first make arrangements for a new accommodation. Then there are the other expenses of setting up home – furniture, upholstery, and maintenance. The heating, water, electricity charges now need to be borne singly as recurring costs. Transport and living costs may also hike depending on the circumstances.  

The Other Factors

Apart from these obvious factors that accompany leaving the marital home behind, there is also the emotional factor – which ironically – may turn out to be the costliest. Many divorcees try to replicate their former homes; many try to make it as different as possible. Similarly, some may terribly miss the old, familiar environs, while for others it helps to recuperate better. This applies to both children and adults.

Article: Housing and Divorce in the UK

Created on: 2007-09-12 13:04:55