The Hidden Costs of Divorce | Understanding Property and Notional Selling Expenses

When going through a divorce, many people are surprised by the number of financial considerations that arise. One of the lesser-known issues is the “hidden” cost of property ownership and how this impacts the financial settlement.

At Hegarty, we often see clients overlook the effect of 'notional selling costs' when dividing assets. These are costs you would usually have to pay if you were to sell your home, such as agent fees and legal costs, and these hypothetical costs are taken into account during a financial settlement. Knowing how these are calculated can make a real difference to the outcome of your case.

Why Property Matters in Divorce Settlements

For most couples, their home is the largest shared asset. During divorce proceedings, both parties must provide full financial disclosure, including details of any property owned:

• In your sole name
• Jointly with your spouse
• With other family members (such as a parent)

You must also obtain up-to-date valuations of the property as it will be necessary to establish what the “net equity” is i.e. what would the net sale proceeds be if put on the market and sold.

If the current market value of the property cannot be “agreed” between the parties and their lawyers, then they may need to instruct a joint estate agent or surveyor to provide a formal valuation of the property.

In order to calculate the “net equity”, the balance of any outstanding mortgage is deducted from the market value along with any early repayment charges and any secured debts. In addition, it is usual to deduct what are known as “notional selling costs” of the property, even if it’s not envisaged that the property will be sold.

What Are Notional Selling Costs?

Even if a property isn’t going to be sold immediately, the court will usually make deductions for notional selling costs. These typically include:

• Estate agent’s fees
• Conveyancing solicitor’s costs
• Early mortgage repayment charges (if applicable)

Traditionally, courts assumed selling costs of around 2%–3% of the property’s value.

However, with more and more estate agents moving towards a fixed fee basis for selling property, a figure of around 2% of the sale price is probably now more appropriate to use, but much depends on the evidence available. For example, if information can be provided from estate agents that their fees are lower than originally expected, then a notional figure of around 1.5% may be more realistic to deduct for “notional selling costs”.

Why Accuracy Is Important

The percentage deducted for notional selling costs can have a significant impact on the final settlement. A difference of even half a percent on a high-value property could change the overall financial “pot” available for division between you and your spouse.

That’s why it is vital to:

• Obtain up-to-date property valuations
• Provide evidence of local estate agent fees
• Seek legal advice early to ensure fair treatment

How Can Hegarty Help?

Divorce is never easy, and financial settlements can be complex. By understanding the hidden costs of divorce, including notional selling costs, you can ensure you are fully informed and better prepared.

Our experienced divorce and family law solicitors can guide you through the financial aspects of your divorce, making sure all assets including property are dealt with fairly. We will:

• Explain how notional selling costs apply to your case
• Help you gather the right evidence to support your position
• Negotiate effectively to protect your financial interests