What happens to parents’ investment in the family home on divorce? 6 factors that courts will assess

As more parents step in to support their adult children — whether by gifting money towards a deposit, helping with mortgage repayments or moving in and contributing to household costs — the question of what happens to that investment if the couple later divorces is becoming increasingly important.

This trend reflects wider social changes — longer mortgage terms, rising care costs and the difficulty of repaying loans before retirement have all increased parental involvement in family homes. While these arrangements may work smoothly when couples remain together, separation introduces added complexity.

Here, divorce and family law expert Debbie Heald from our Brabners Personal team explores how the courts approach parental contributions in divorce and the practical steps that families may need to consider.

Parental contributions to the family home in divorce proceedings

When parents invest in their children’s family home, questions often arise during divorce about how those contributions should be treated. The onus is on the parent to intervene in the proceedings and they’ll need their own legal representation. 

The court must then decide two key issues:

1. Has the parent acquired an interest in the property? 

Property law will apply here which is vastly different in nature to the discretionary approach used in matrimonial proceedings. Where the parent isn’t on the legal title and there’s no Deed of Trust, they must demonstrate that a trust has arisen — usually a common intention trust.

2. How should the property be dealt with?

A third-party beneficial interest won’t be available for distribution. However, if the parent will continue to live with their adult child and roll their funds into a new property for that purpose, those resources may be taken into consideration when assessing housing needs. An equally reasonable housing requirement may also need to be adapted as a result. 

Case study — A v N (R intervening) [2025] EWFC 371

The facts & outcome

In a recent case, the wife’s mother contributed £130,000 towards the purchase of a couple’s family home and a further £77,850 to build an annex for her own occupation, covering all associated costs. She also paid for the annex’s ongoing maintenance and outgoings. Despite these significant contributions, she didn’t feature on the legal title to the property. 

When the parties separated, the treatment of her contributions became an issue in determining the matrimonial pot available for distribution. The wife’s mother intervened in the proceedings, arguing that she held a beneficial interest in the property. 

On the evidence, the Court found the £130,000 contribution towards the purchase of the family home to be an outright gift to the wife. By contrast, the annex was deemed to be the mother’s separate property. As the annex didn’t have a separate title, she was found to hold a 12% interest in the wider family home. This left 88% of the equity as matrimonial property available for distribution which the Court distributed based on needs — 56% to the wife and 32% to the husband. 

Guidance given by the Court

When dealing with third-party interests — whether parents or any other individuals — in the context of orders for sale in divorce proceedings, the Court has set out a non-exhaustive checklist of factors of consider:

1. The extent of the third party's interest in any property compared with that of the spouses.
2. Whether the property is the home of the spouses.
3. Whether the property is the home of the third party and if they have a right of occupation or merely a form of investment.
4. Whether the property has been modified or adapted in any particular way for the benefit of the third party.
5. Whether the third party's age or medical condition makes the sale onerous for them.
6. If the property is the third party's home, whether it’s proposed and practical for them be adequately rehoused with one of the other parties.

What steps can be taken to protect contributions from parents? 

If the contribution isn’t intended as a genuine gift, it’s important to consider protective measures to prevent any future family conflict, unnecessary complexity or exposure to costs orders. The costs rules that apply to property disputes differ from those in matrimonial proceedings — the starting point is that the unsuccessful party will be liable for the successful party’s reasonable costs. In A v N (R intervening) [2025] EWFC 371, for example, the Court ordered the husband to pay 70% of the wife’s mother’s costs, assessed at £12,600.

Consequently, when making any contribution towards a property — whether towards the purchase price or otherwise — the following should be considered:

1. Should the contribution be formally recorded? It’s imperative to ensure that the legal title reflects the beneficial interests in the property. A Declaration of Trust can be used to specify unequal interests.
2. Should the intended approach to the contribution in the event of separation or divorce be recorded in a pre- or post-nuptial agreement? For example, the contribution could be ringfenced as non-matrimonial or a separate property.

Talk to us

Divorce cases involving parental contributions demand careful handling. Issues of ownership, beneficial interests and third‑party claims can quickly complicate proceedings. Our award-winning family team guide you through these complexities, safeguard your position and secure the best possible financial outcome.

Speak to our specialist divorce and financial settlement solicitors today by calling 0333 004 4488, emailing family@brabners.com or completing our contact form below.

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