This is due to the recession having diminished the value of many assets:
Splitting one household into two is becoming increasingly difficult. Stagnant or in some cases falling house prices, reduced savings and volatile investment and pension funds, are acting as a ball and chain for many parties wishing to separate. So much so, that some couples are delaying bringing divorce proceedings due to a lack of funds and diminished asset values.
Conversely, some individuals are using the current economic climate to their advantage. For the higher earner, commencing divorce proceedings during the recession could mean benefiting from a reduced settlement based on lower asset values and lower income.
Where couples do decide to separate or divorce, the way in which the assets are shared is becoming less straight forward.
This is due to mortgage lenders now having tougher lending conditions and requiring larger deposits. In some cases we are finding that lenders are not prepared to lend at all, perhaps due to a low income or not taking certain benefits or child maintenance income into account.
Other issues can arise when for instance one party wishes to buy out the other party’s interest in the family home. We are regularly seeing that mortgage lenders are unprepared to release one party from a joint mortgage. There are other options that divorcing couples can consider, such as a “Mesher order” or a “transfer with chargeback”, however some individuals who may have been homeowners for a long time are finding that they are forced to rent. This is a more recent development as prior to the recession lenders were less cautious and it appeared simpler to meet both parties’ future housing needs.
Due to the above, there is also a renewed focus on other assets such as pensions which are becoming a critical consideration in terms of the overall settlement.
Whilst the changes we are seeing may appear to be rather depressing at an already difficult time, our specialised family law team are experienced in getting over these hurdles and working towards overcoming the issues that the recession brings.
For further information, or for an informal chat with one of our family team please contact us.