My Ex Lives in the Family Home - Should They Pay Occupational Rent?

When a relationship breaks down, it is common for one party to remain in the family home while the other pays for accommodation elsewhere.  This situation can raise concerns of fairness if one party is able to continue to enjoy the use of the home.  In this article, we explore the concept of “occupational rent” and how it can help separating couples reach a fair outcome.

What is Occupational Rent?

Occupational rent is essentially “market rent” paid by the party continuing to live in the family home to compensate the party who moves out and pays for alternative accommodation.  Depending on the amicability of the separation, this arrangement can last for months (or even years) until issues regarding ownership are finalised. 

How is Occupational Rent Calculated?

The standard calculation is 50% of the market rent.  For example, if the market rent for the family home is $700 per week, the party who moved out will be due $350 per week from the separation date to the date matters are settled.  Parties can agree amongst themselves an acceptable market rent value, or an expert may be called upon to determine the appropriate market rent.

But I’ve Been Paying the Mortgage

In practice, occupational rent is often used as an offset to balance claims for other costs or post-separation contributions.  Occupational rent is often offset against the mortgage, rates and insurance of the family home to ensure each party’s post-separation contributions are compensated fairly.  It can even be used to counter spousal maintenance payments. 

Is Occupational Rent a Certainty?

Whether to order a payment of occupational rent is entirely at the Court’s discretion.  It is not a guarantee and cannot be relied on.  The Court sometimes takes a “broadbrush approach”, meaning that every set of circumstances is assessed on its own merit.  The Court uses its power under the Property (Relationships) Act 1976 to consider whether an order is just, considering factors including the financial impact an order would cause to either party and the interests of any children.

Knowing your rights and obligations following a separation can be difficult.  The experienced team at McCaw Lewis can help you navigate relationship property matters or answer any questions you may have.

Chantelle is an Associate in our Dispute Resolution Team. 

Chantelle can be contacted on 07 958 7473 or chantelle.holland@mccawlewis.co.nz