The Law Commission has proposed significant changes to the way relationship property is dealt with when a couple separates. The commission published their proposal in a review last year, which sets out their preferred approach for property division when a relationship ends.
The Property (Relationships) Act 1976
Since the Property (Relationships) Act 1976 (“the PRA”) came into force, couples who have been together for three years or more have been required by law to divide all “relationship property” equally, subject to few exceptions.
Generally speaking, “relationship property” is all property acquired during the relationship, or acquired before the relationship began but used for relationship purposes. The family home and family chattels constitute relationship property “whenever acquired”, meaning it does not matter whether you owned that property before the relationship nor does it matter whether one partner contributed more than the other to these assets; they will be relationship property regardless and therefore available for equal division between partners.
Other relationship property can include:
- All jointly owned property;
- Property acquired in contemplation of the relationship (for example, buying a holiday home under the name of one party pre-marriage with the intention of using it for the family);
- Superannuation, Kiwisaver policies (the proportion that is relevant to the relationship period);
- Rental/investment properties;
- Shares, investments;
- Business interests;
- In some circumstances, rights in respect of a Trust;
- Relationship debt (which does not necessarily have to be in joint names).
For more information see our article “What is Relationship Property?”.
Since the PRA was passed, over 40 years ago, New Zealand’s family demographics have dramatically changed. Blended families are not unusual – people are marrying more than once in their lifetimes, separation is far more common, and people are now bringing significant assets, such as real estate, into relationships. It is in the light of the changing nature of families and property ownership in New Zealand that the PRA and all its implications are being called into question.
At the beginning of November 2018, the Law Commission published a review based on the survey “Relationship Property Division in New Zealand: Public Attitudes and Values” conducted by Otago University. The results of this survey make it clear the majority of the public does not think the PRA fits well with our modern-day society. For example, the law that the family home is split equally in the event of separation, even if one partner purchased that property before the relationship began or contributed significantly more to the deposit, was considered particularly unfair. This view is understandable given the current housing market. Opinions like this and others frame the review put forward by the Law Commission, with the intention of seeing the future of property division in New Zealand made more equitable for modern families.
The Law Commission has made the following proposals for change to the PRA:
- The family home should only be split equally if it was purchased during the relationship.
- Couples who have children, couples who have been together for ten years or more, or those who have built or sacrificed careers because of the relationship, should be required to share their combined income for a period after separation, to ensure the economic advantages and disadvantages from the relationship are shared more equitably.
- The Court should have greater powers to share Trust property owned by parties.
- Children’s best interests should be given higher priority under relationship property law. For example, the primary caregiver should be given a default right to stay in the family home for the period following separation.
- There should be ways to address behaviour that causes a delay in court proceedings under the PRA, for example, parties who fail to disclose relevant information about their assets.
Read the full review here. The Law Commission intends to make its recommendations to the government this year, which may lead to significant changes in the way property is dealt with upon separation.
For more information
If you have any questions about these potential changes and how they might affect you, or if you would like to know how you can protect your assets under the current law, please get in touch with our family law team: