Taunton house price increase: what does it mean for your divorce?

Taunton house price increase: what does it mean for your divorce?

The mortgage lender Halifax has published details of house prices in the UK over the last year. The figures show that prices in many parts of the country have been increasing, with the biggest increase recorded for Taunton in Somerset.

According to Halifax, the average price paid for a property in Taunton rose by a staggering 21.8% in the 12 months to October. That is an increase of £56,546, to £315,759.

This may be good news for Taunton homeowners, but what does it mean for anyone involved in divorce proceedings?

Well, there are a number of possible implications when it comes to the financial settlement on divorce, some obvious, other perhaps not so.

 

Professional valuation

The first and obvious thing to say, and this applies no matter what is happening to property prices in your area, is that if the (former) matrimonial home is owned, then you should get it professionally valued. Never rely upon your own estimate for the value of the property.

And make sure the valuation is kept up to date, especially when house prices are changing rapidly. A divorce settlement can take many months to sort out, particularly if it is going through court, and price changes of the magnitude mentioned above can obviously mean that the property can be worth far more when the settlement takes place than it did when the marriage first broke down.

 

Sell or keep?

If the former matrimonial home is owned then usually one of two things will happen when the divorce settlement goes through: either it will be sold and the proceeds divided between the parties, or one party will keep the property, buying out the other party’s share.

If the property is sold and the proceeds divided then in a sense rising property prices should not be so important. After all, both parties will benefit from any increase in value. Make sure, however, that if you are to receive a proportion of the proceeds that it is expressed as a percentage of the net proceeds of sale, rather than a fixed amount, which would not go up with the value of the property.

Increasing prices can however be relevant on a sale if one party is to receive the entire net proceeds.

They can also be relevant when the settlement calls for the property to be sold at a later date, perhaps when the children have grown up.

But increasing prices are perhaps most relevant when one party keeps the property and buys out the other party’s share. Obviously, the person being bought out must ensure that the sum that they receive is calculated by reference to the current value of the property, not what it was worth at some date in the past.

And if house prices are going up you may want to consider the possibility of retaining the property as part of your settlement, as an investment (although obviously prices can go down as well as up). Remember, the court will only be concerned with the valuation of the property at the date of the settlement – it will not be interested in what the value may be at some future date.

 

Rehousing

Obviously, when a divorce takes place at least one of the parties will need to rehouse themselves, usually by purchasing a new property using a lump sum of money received from the divorce settlement, plus a mortgage.

And if that applies to you and house prices are increasing rapidly then you will need to ensure that when you receive the lump sum you will still be able to afford the kind of property that you want. It may also take you some while to find the right property.

You could try to factor these things into the calculation of the amount that you should receive from the settlement, but if the lump sum is based upon the value of the former matrimonial home then, as mentioned above, the court will calculate the lump sum on the basis of the current value of the home, not some future value.

And sometimes the settlement entails receiving a lump sum at a later date, or by instalments. Again, price rises may have to be factored in, to ensure that when you receive the lump sum it is still enough for you to rehouse yourself.