The Law Commission says the current law for dividing property on separation is out of date and in need of reform.

The report on the Law Commission's review of the law, Review of the Property (Relationships) Act 1976 - Te Arotake i te Property (Relationships) Act 1976 has been tabled in Parliament.

It contains 140 recommendations made after a three-year review of the legislation.

Justice Minister Andrew Little says the Coalition Government will now give further consideration to the report recommendations and the wider impact of its proposals.

The Law Commission recommends a number of changes which aim to make the law fairer for partners dividing property on separation.

The key recommendations include:

• Changing how the family home is shared. If the family home was owned by one partner before the relationship began or was received as a gift or inheritance, only the increase in the value of the home during the relationship should be shared.

• Giving a court greater powers to divide trust property. These powers should apply when a trust holds property that was produced, preserved or enhanced by the relationship.

• Introducing Family Income Sharing Arrangements or FISAs, which would require some partners to share income for a limited period following separation in order to ensure the economic advantages and disadvantages from a relationship are shared more fairly.  

• Giving children's best interests greater priority in relationship property matters. This should include greater rights to occupy the family home in the period immediately following separation.

• Improving the way relationship property matters are resolved in practice to address behaviour that causes delay and increases costs.

"New Zealand has undergone a significant period of social change since the Property (Relationships) Act 1976 was passed," Deputy Law Commission President and lead Commissioner on the review, Helen McQueen says.

"It is important that the law keeps pace with social change and reflects the reasonable expectations of New Zealanders. In our view, the law for dividing property on separation is no longer fit for purpose in 21st century New Zealand.

"We think that some of the fundamental concepts of the law remain appropriate, such as the general rule of equal sharing and its application to marriages, civil unions and de facto relationships that last for three years or more.  

"But we recommend other significant changes that will affect what property is shared. These recommendations are designed to make the law more responsive to the wide range of different family situations that exist today."