By Kavi Chauhan, Deputy Head of Conveyancing & Licensed Conveyancer.
Joint tenancy and tenancy in common are types of co-ownership on a property. We’ll take you through what each one means, so you can fully understand and make an informed decision that works for everyone, whether you’re buying as a couple, with friends or with family.
In this article:
- What is joint tenancy?
- What is tenancy in common?
- What’s the difference between joint tenants and tenants in common?
- What is best, joint tenancy or tenants in common?
- Changing your type of ownership
What is joint tenancy?
In joint tenancy, ownership of a property is equal. If one party wants to sell, the other must agree to buy them out, or for the property to be sold. When one person passes away, the other joint tenant assumes full ownership – known as the rule of survivorship. Buying a house as joint tenants is a popular option for married or co-habiting couples.
Find out more about the process of buying a house.
What is tenancy in common?
Tenancy in common means each person owns a separate share of the property. These don’t have to be equal in size, so one person could own 75% and the other 25%, for example. Up to four people can be legal owners with tenancy in common.
Find out more about buying a house with a friend.
What’s the difference between joint tenants and tenants in common?
It may seem complicated, but we’ll break it down so you can understand the differences.
- Division of property: Joint tenants have equal rights to the whole property. Tenants in common own a specific percentage each.
- Rule of survivorship: With a joint tenancy, upon death of one of the owners, it automatically gives full ownership to the other owner/s. You can’t leave your half of the property to someone in your will. With tenants in common, if you die, your share goes to your estate, so you can leave it to whoever you want.
- If someone wants to sell: In both types of ownership, if one person wants to sell, the other/s must buy them out or agree to sell the property. Joint tenancy mortgages require the agreement of both parties to sell the property. Tenants in common can sell their share of the property.
- Mortgage: Joint tenants will need a joint mortgage. You can get a separate mortgage as tenants in common, however lenders usually prefer you have a joint mortgage for both types of ownership.
What is best, joint tenancy or tenants in common?
Which type of ownership is best, depends on your needs. If you’re buying as a couple, joint tenancy is a popular choice. It simplifies things if one partner dies – the other automatically inherits the property, which avoids probate and inheritance tax issues. This mean your share in the property is secure, however you can’t choose to leave your share to someone else.
If this is what you’d like to do, consider tenancy in common. Do bear in mind that leaving your share to someone else could cause disputes and your spouse/partner may be forced out of the home.
If one person is contributing more to the deposit, for example, and you want this reflected in the ownership, tenancy in common is the better option.
One of the disadvantages of tenants in common is that it’s less straightforward. It’s advised that you get a Deed of Trust to confirm your share and what will happen if the property is sold or bought out. This will incur an additional solicitor’s fee; but it makes it simpler if you want to sell.
You can also create a Deed of Trust or Cohabitation Agreement with a joint tenancy if you want to lay out the legal rights and financial interest of co-owners in the event of a separation.
Joint tenancy means each owner automatically gets half each if you separate (if it’s two co-owners), even if one has invested more money in the property. It can also be difficult to force your partner to sell with a joint tenancy.
With tenants in common, each person can own an unequal share, and this will be reflected in what they receive if the property is sold.
Changing your type of ownership
It’s possible to change from joint tenants to tenants in common. This is often done for tax purposes, so couples can declare unequal beneficial shares in their property. It’s also sometimes done when couples separate, to reflect their interest in the property more accurately.
To change your type of ownership, you need to complete form SEV and send it, along with supporting documents, to HM Land Registry. If one party hasn’t agreed to this, you’ll need to serve them written notice, as well as filling in the form.
Ready to get a conveyancing quote? You can use our online calculator to get a quote for your purchase. Our quote will not include the cost of getting a Deed of Trust, if you think this is the right option for you, you can contact one of our helpful quote advisers for more information.