Cohabitation agreements: what are they and do I need one?
When you live together as a couple, it is easy to assume that sharing a home means sharing ownership. However, living together as cohabiting partners does not of itself establish an interest in the home. Before moving in together, you should take legal advice, consider how best to record your intentions regarding your home, and protect your contributions to the property, by making a Cohabitation Agreement and/or a Declaration of Trust.
What is a cohabitation agreement?
A cohabitation agreement is a legal agreement made between two people who live together as a couple (or plan to do so) but who are not married or in a civil partnership. Its primary focus is usually on setting out intentions regarding ownership and running of the home, reflecting each party’s legal and beneficial interest in the property (which should be established by joint ownership or a declaration trust – see below) and setting out how any mortgage and household expenses will be paid during cohabitation.
A cohabitation agreement often sets out what should happen to assets and liabilities if the relationship comes to an end or if one cohabitant dies (though it is important to take separate advice on wills and ensure that you have made a valid will). For example, where the property in which the couple has been living is co-owned by them, they may agree to sell the property if cohabitation ends and divide the proceeds, or there may be an opportunity to buy out the other party. A cohabitation agreement can record ownership of personal property (items such as cars, furniture, sports/gym equipment or art), which may be used or enjoyed by both cohabitants when they live together, but will be retained by the original owner if cohabitation ends.
For high‑net‑worth (HNW) couples, the agreement can be tailored to reflect:
- Pre‑existing wealth and family assets.
- Property ownership and capital contributions.
- Business interests and complex asset structures.
- Ongoing financial commitments and future expectations.
A properly prepared agreement should protect both parties and avoid the cost of litigating about former cohabitees’ respective beneficial interests in the home when cohabitation ends.
Legal ownership and beneficial ownership of property: what’s the difference?
Ownership of property gives rise to important rights to live in, deal with, benefit from, and in some circumstances, require the sale of the property. Before moving into a property (for example a property owned by your partner), it is important to take legal advice about ownership, as you are unlikely to gain the protections attached to ownership simply by living in the property.
In England and Wales, there is a difference between legal ownership and beneficial ownership.
- Legal ownership refers to whose name appears on the title deeds (as registered at the Land Registry). The law formally recognises them as owning the property.
- Beneficial ownership is about who is entitled to benefit from the property in practice – for example, who is entitled to live there long‑term or to receive a share of the proceeds if the property is sold.
The legal and the beneficial owners may be the same – but this is not always the case. One partner may be named on the deeds, while both partners may have an interest in the value of the property, particularly where they have both contributed financially towards the home. In these situations, the legal owner (the person named on the deeds) is said to hold the property on trust for the person who has the beneficial interest. You cannot always assume that contributing to a property will entitle you to benefit from it, so it is always best to take legal advice and ensure that your interest is properly documented.
There are two ways in which the beneficial co-owners may hold the equitable estate to property:
- As joint tenants.
- As tenants in common.
A joint tenancy is where the property is held in equal, indivisible shares and all the beneficial owners are equally entitled to the whole property. On the death of one joint tenant, the survivor automatically inherits the property (regardless of what that person’s will says).
A tenancy in common is where each person owns a particular distinct share in the property, be it 50% each or unequal shares. Where the property is sold, they would each receive their percentage share. As each tenant in common owns a distinct beneficial share of the property, each can transfer their share without the other’s consent.
On the death of one tenant in common, their share passes according to their will. It is therefore crucial for these cohabitants to consider entering a declaration of trust when buying a property to confirm the extent of their respective beneficial interests and vital to make a will if they wish to provide for their partner upon death.
What is a declaration of trust?
A declaration of trust is a document that establishes and regulates the beneficial ownership of a property. In the absence of a vitiating factor (a factor that would “undo” the agreement), such as fraud, mistake or duress, an express declaration of trust is conclusive evidence of beneficial ownership unless such interests are subsequently varied.
A declaration of trust should always be made where the property is jointly owned as tenants in common or where the legal title is different to the beneficial interests (for example where the property is in the sole name of one party, but the intention is for someone else to have a legal interest in the property).
What is the difference between a cohabitation agreement and a declaration of trust?
A cohabitation agreement is a flexible, bespoke agreement regulating cohabitation and often the financial aspects of cohabitation, such as who will pay the mortgage and other specific outgoings while the parties live together, and what will happen to the financial arrangements should the relationship break down. A cohabitation agreement can include setting out ownership of the property and often contains a declaration of trust within it – although it can stand without a declaration of trust and may simply contain provisions relating to other financial aspects of the relationship.
A declaration of trust expressly states how the beneficial ownership of a property is shared between the parties. It can be executed as a standalone document or included within a cohabitation agreement.
Why should I have a cohabitation agreement?
Living together does not offer couples in England and Wales the same legal protections as marriage or civil partnership, regardless of how long the relationship lasts, whether the parties have children together, or how interlinked finances become. Without the protection of a cohabitation agreement, disputes concerning property rights and ownership leave couples with little choice but to pursue complicated trusts and property law claims. Such proceedings are highly technical, costly to pursue, and uncertain in outcome.
A cohabitation agreement allows partners to take control by agreeing arrangements in advance, protecting pre‑existing assets and family wealth while also providing transparency, fairness and security. In practice, it is one of the most effective ways to avoid expensive, time‑consuming litigation and to ensure both partners are treated as they intended if circumstances change.
For high‑net‑worth individuals living together outside marriage or civil partnership, a cohabitation agreement is an important part of financial planning, providing both partners with clarity, fairness and security, particularly where there is any financial imbalance. Our specialist Family team at Forsters can tailor a cohabitation agreement that’s built around you.
Does it matter who legally owns the home?
The home that is the main subject of the cohabitation agreement can be owned by one party, co-owned by the parties together (in equal or unequal shares), or owned by a third party. Difficulties often arise where a property is owned by one partner and the other has made some financial contribution towards it, but no clear record has been made of how those contributions should be treated if the relationship breaks down. In all cases, whether the property is jointly or solely owned, it is important to ensure that intentions are discussed and recorded in writing.
If the property is solely owned by one cohabitant, usually the other cohabitant will not have any rights to the property. The presumption is that the property is held in the way it is recorded at the Land Registry, and technically the non-owning cohabitant would have no right to occupy the property on a separation or claim a share. There may be an exception if the non-owning cohabitant can prove that they have contributed to the deposit or mortgage payments, or made a financial commitment to the property, such as paying for substantial renovations, on the understanding that they would own a share of the property. However, disputes as to whether a property should be treated differently to how it is legally owned can be difficult and costly, so it is far better to consider actual and potential contributions and enter into a declaration of trust and cohabitation agreement at the time of the purchase.
A cohabitation agreement can be used to expressly permit the non-owning party to occupy the home as a licensee and clarify that the non-owner has no beneficial interest in the home.
Is a cohabitation agreement legally binding?
A properly concluded cohabitation agreement should be legally binding if the parties intend to create legal relations, there is no express or implied provision for payment for sexual relations, and the agreement complies with the necessary requirements for a valid contract (Sutton v Mishcon de Reya and Gawor and Co [2003] EWHC 3166 (Ch)).
Accordingly, you should expect to be held to the terms of a cohabitation agreement. However, no recent cases have tested their enforceability.
What are the advantages of entering into a cohabitation agreement?
- Clarity and transparency – Both parties are aware at the outset how their home and other assets will be owned, how their financial affairs will be arranged going forward and what should happen if the relationship comes to an end. This removes ambiguity and reduces the risk of future misunderstandings or disputes.
- Autonomy and control – The couple has the freedom to organise their financial future, enabling couples to make decisions that reflect their own circumstances, priorities and values, rather than risking leaving the outcome to the courts.
- Encouraging open communication – Although sometimes seen as unromantic, discussing and documenting financial arrangements early on can encourage honest conversations and mutual understanding at the outset of a relationship and actually strengthen the relationship as a partnership.
- Flexibility and tailoring – Each agreement can be bespoke, addressing a wide range of issues such as property ownership, mortgage payments, household expenses, savings, debts and arrangements on separation. The agreement can also be reviewed and updated as circumstances change.
- Protecting the “Bank of Mum & Dad” – Where parents have gifted, loaned or invested funds to enable a child to purchase property and the child subsequently wishes to cohabit with their partner in the property, parents may want a cohabitation agreement to protect family money invested in the property.
- Protection for both parties – Whether one partner is contributing more financially, bringing assets into the relationship, or giving up work or career opportunities, a cohabitation agreement can provide transparency and protection for both individuals – especially for the financially weaker party where the current absence of legal protections for cohabiting couples can expose families to real financial risk.
- Avoiding costly disputes – Without an agreement, property and financial disputes between cohabiting couples must be resolved through technically complex trusts and property law claims. A cohabitation agreement can significantly reduce the likelihood of litigation and the associated cost, stress and uncertainty.
- Future‑proofing in an uncertain legal landscape – With reform to cohabitation law anticipated but still uncertain in scope and detail (see below), a cohabitation agreement allows couples to secure certainty now rather than waiting for a statutory framework that may not reflect a couple’s preferences.
Cohabitation reform on the horizon
The Government is expected to launch a public consultation on cohabitation law reform in late Spring 2026. The consultation will play a pivotal role in shaping what rights and responsibilities cohabiting couples will have when relationships break down (or when one partner dies) in the future. For what this may mean for cohabiting couples, read our article Cohabitation reform 2026: what unmarried couples need to know now.
Against a backdrop of anticipated but still uncertain reform (including what any new law will look like, who it will apply to, when it may come in and the extent to which it can be contracted out of), there is a strong case for cohabiting couples to take control now. By entering into a cohabitation agreement, couples can achieve greater certainty by clearly recording their intentions about property ownership, financial contributions and what should happen if the relationship ends. A cohabitation agreement provides a tailored solution at a time when the scope and detail of any future statutory scheme remain unknown – and may not ultimately reflect a couple’s individual preferences.
