The reduced rates on stamp duty at the moment has helped open up the property market to first time buyers allowing lots of couples to purchase their first home together and providing many with the opportunity to move house without incurring stamp duty fees.


But how can you protect yourself if you are buying a house with someone else and you are not contributing equal amounts?


This is quite common in scenarios such as:

  • One of you is being gifted a helping hand with your deposit from parents.
  • One of you has savings or inheritance that you are using as a deposit.
  • One of you is already a homeowner and you are using equity from the sale towards your joint purchase.
  • One of you is moving in with a partner who is already a homeowner and you will both be paying the remaining mortgage.

What is a Declaration of Trust?


A Declaration of Trust is a legally binding document that sets out the financial arrangements between people who own a property together or who have a shared financial interest in a property.


Buying a property is a serious financial commitment and a Declaration of Trust can help give peace of mind for both parties in the event that the relationship breaks down. It provides transparency of contributions put in by each party and the agreed plan of action should the property need to be sold or split in the future.


You can enter into a Declaration of Trust at any time, however it is advised that this is done when you complete your property purchase so that you have clarity from the offset.


What Can be Included?


Your Declaration of Trust is a bespoke, personal document and what is included will depend on your personal circumstances and wishes.


Typically, it would include details of the deposit – how much each person contributed, this can include legal fees and other expenses relating to the transaction too. It can set out how the mortgage payments and property maintenance will be shared, e.g. 50/50 or one person may be contributing more to the mortgage than the other. It can confirm how the equity in the property would be split and also any arrangements you have agreed on about transferring ownership or selling the property.


It is worth noting that both parties named on the mortgage are responsible for the mortgage re-payments, regardless of the proportions in which you share beneficial ownership or your personal agreements with monthly payments.


Are There Any Other Options?


Depending on your circumstances it may be worth considering a cohabitation agreement, a pre-nuptial agreement or post-nuptial agreement to further protect your assets.


It is also sensible for anyone buying property to consider making a will or checking whether their existing will requires updating to reflect their new circumstances.


Many people buy a property together without considering the impact of breaking up – it is hardly a romantic conversation to have whilst browsing houses together! But it is worth giving some thought to. Often couples may have an open conversation about how they would be fair to one another in the event of their relationship not working out, however, things can change down the line and those verbal agreements can get lost in translation.


Declaration of Trust to Protect ‘Bank of Mum & Dad’


If your parents or relatives have kindly gifted a deposit, sizable lump sum or have loaned you money to get a foot on the property ladder, then you may been keen to protect their interest in the event that the relationship breaks down.


A Declaration of Trust can help ring fence contributions made by others who are not the property owners should circumstances change in the future.


Need Advice on Property & Financial Protection?


If you are looking for some reassurance, protection and guidance then please get in touch with our Private Client Team who can help suggest the best way forward to give you peace of mind.


Call our office on 01256 844888, email enquiries@lambbrooks.com or speak to our online chat assistant.


Other Articles You May Be Interested in Reading:

Property Market Boom: How You Can Help Us to Help You

5 Things You Need to Know if You Are Living Together

Why You Should Have a Will in Your 30’s


The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.