UK cohabitation reforms pose risks to 3.5m households' assets

The UK Ministry of Justice launched a consultation on June 5 proposing automatic marriage-like financial obligations for couples who live together for three years or have a child. Under the plan, either partner could ask a court to make financial orders upon separation, giving judges broad powers to decide how properties, assets, and pensions are shared. The proposals also extend to death, granting automatic inheritance rights to qualifying cohabitants when a partner dies without a will.

The reforms target 3.5 million unmarried couples, introducing profound shifts in household wealth management. While the government aims to protect vulnerable women who become financially disadvantaged, many cohabiting couples hold relatively modest assets compared to married couples. For these households, resolving financial disputes through court-ordered property transfers could rapidly consume their wealth in legal costs, as maintenance would only be granted in exceptional circumstances.

The legislative push is advancing in parallel with the public consultation, which closes on August 14. Jonathan Marks re-introduced a cohabitation rights bill in the House of Lords on June 5 that closely mirrors the government's framework, including an opt-out system. Parliament will debate the bill's second reading on July 17, marking the first real test of Justice Secretary David Lammy’s approach to family law.

Cross-bench peer Ruth Deech warned that the automatic enrollment system ignores millions of divorced and widowed women who have deliberately chosen financial independence. These individuals often rely on homes, pensions, and assets secured through divorce settlements or inheritance, using cohabitation specifically to avoid financial integration. If a partner refuses to opt out before the three-year threshold, Deech noted these women would face a brutal choice between accepting unwanted legal obligations or leaving the relationship.

The proposal also raises concerns under Article 8 of the European Convention on Human Rights, which protects the freedom to choose different forms of relationships and the legal obligations tied to them. Furthermore, the consultation suggests courts would need to evaluate highly intrusive criteria to determine if a relationship qualifies, including the presence of a sexual relationship. Critics argue that existing legal tools—such as cohabitation agreements, property ownership choices, and wills—already allow unmarried couples to manage their financial affairs without forced state intervention.