Tenants in Common or Joint Tenants?
When two or more people buy a property together there are two ways the property can be owned:
- joint tenants
- tenants in common
When you co-own a property as joint tenants, each co-owner owns the whole of the property and neither owner has a specific share.
If you co-own a property as tenants in common, each co-owner owns a specific share of the property. The shares might be unequal, for example if one person has contributed more money to the purchase.
The terms refer to 'tenants' even though they relate to property ownership. The type of ownership affects what will happen if you want to sell the property and go your separate ways, or if one owner dies.
- What is Joint Tenants?
- Advantages and Disadvantages of a Joint Tenancy
- What is Tenants in Common?
- Advantages and Disadvantages of Tenants in Common
- Joint Tenants vs Tenants in Common
- Can I Change the Type of Joint Ownership?
- How do you Change a Joint Tenancy to Tenants in Common?
- How do you Change a Tenancy in Common to a Joint Tenancy?
- What Legal Rights do Tenants in Common Have?
- Do you Need a Tenants in Common Mortgage?
- What Happens When one of the Tenants in Common Dies?
- Learn More About Conveyancing
What is Joint Tenants?
With a joint tenancy, each co-owner owns the whole of the property, and each has a 100% stake in the property's value. Married couples that own property together are usually joint tenants.
In the eyes of the law, joint tenants need to act together as a single owner and all owners must agree to sell the property. When the property is sold each joint tenant will get an equal share of the proceeds, regardless of their contribution to the deposit or mortgage payments.
Joint tenants can’t leave part of the property to someone else in their will – it automatically passes to the other owner or owners. This is known as 'right of survivorship'.
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Advantages and Disadvantages of a Joint Tenancy
Below we list the advantages and disadvantages of a joint tenancy.
| Advantages | Disadvantages |
|---|---|
The most simple form of property ownership | Doesn’t allow for unequal ownership |
Lower legal fees and less documents | When the property is sold, the proceeds are split 50:50 regardless of financial contribution |
All parties have equal rights to the whole property | Selling the property needs consent of all parties |
Ideal for couples who want their partner to inherit their share when they die | Where one party won’t give consent to sell, you’ll need a court order |
Best suited to married couples or long-term partners | You can’t pass on your ownership of the property in your will |
What is Tenants in Common?
As tenants in common you can own different shares of the property. This is useful if one person is contributing more to the deposit or mortgage payments than the other person. For example, an unmarried couple may own a property with a 70:30 split.
If you are tenants in common, you can choose who your share of the property goes to when you die.
Tenants in common is normally used by cohabiting couples with different deposit amounts, or friends buying property together. It’s also used by couples who have children from previous relationships they want to inherit their share of the property when they die.
Most tenants in common have a 'deed of trust' or 'declaration of trust' drawn up by a conveyancing solicitor. This document is not required by law but is useful to ensure transparency.
The deed of trust can cover things such as:
- How household expenses will be split
- What will happen if one person wants to move out or sell up
- Who can live in the property (i.e. lodgers or partners)
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Advantages and Disadvantages of Tenants in Common
Below are the advantages and disadvantages of tenants in common.
| Advantages | Disadvantages |
|---|---|
Each party owns a separate share of the property | A deed of trust is an extra expense, normally about £240 |
Easier to force a sale | You’ll need a will to set out who your share should pass to when you die |
You can leave your share to whoever you want in your will | Any sale still requires all parties sign the transfer deed |
A smaller ownership share doesn’t mean limited rights to the property | Co-owners can sell their share to anyone, without approval from other co-owners |
A deed of trust can simplify things in the event of a separation | Unmarried partners won’t automatically inherit the other’s property share |
Joint Tenants vs Tenants in Common
Choosing whether to buy a home as joint tenants or tenants in common is an important decision. It affects how the proceeds will be split when a property is sold and what happens if one person dies.
A joint tenancy may be the best option for a married couple. Tenants in common might be better if a couple is buying together but either have children from a previous relationship they want to inherit their share. Tenants in common is also best for friends buying together.
Tenants in common is also a way to cut inheritance tax as your share in the property can be left in a trust to your children or beneficiaries. It can also help with care home fees, as the government will only means test you for the part of the property that you own.
| Joint tenants | Tenants in common | |
|---|---|---|
How is ownership split? | You both own 100% | You can own unequal shares |
What happens when I die? | You share passes to the other joint owner | Your share passes to beneficiaries in your will |
Are financial contributions reflected in ownership? | No | Yes |
Will all parties need to agree to selling the property? | Yes | Yes |
Who is this type of ownership best for? | Married couples, or those in a long-term relationship | Newer couples or friends buying together |
Do we need as deed of trust? | No | No, but it’s a good idea |
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Can I Change the Type of Joint Ownership?
Yes, it's possible to change from joint tenants to tenants in common or vice versa. There's no fee for this.
You might want to change from joint tenants to tenants in common if you separate from your partner or get divorced. You might change from tenants in common to joint tenants if you get married.
You can also change from sole ownership to tenants in common or joint tenants if you want to add your partner as joint owner of your home.
How do you Change a Joint Tenancy to Tenants in Common?
If you own a property as joint tenants, you can change your type of ownership to become tenants in common. This is known as 'severing a joint tenancy’.
You can make this change without the other owner’s agreement. To do so you’ll need to apply for a ‘Form A restriction’ and send it to the Land Registry.
If the other owner or owners don’t consent to the change, you’ll need to serve a written notice of the change (called a ‘notice of severance’). It’s best to get legal advice about this.
How do you Change a Tenancy in Common to a Joint Tenancy?
To change from tenants in common to joint tenants, you'll need the agreement of all the other owners.
You'll need to fill in application form RX3 to cancel a restriction. A solicitor can help you do this.
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What Legal Rights do Tenants in Common Have?
As tenants in common, each person has their own share in a property. However, all tenants in common have an equal right of access to the property, regardless of their ownership amount.
Tenants in common are free to make independent decisions about selling or transferring their property shares.
If you rent out the property, tenants in common will be entitled to a percentage of the rental income equal to their ownership shares.
Tenants in common should consider drawing up a ‘deed of trust’ to protect each tenants' individual interests.
Do you Need a Tenants in Common Mortgage?
When you buy as tenants in common you will normally get a joint mortgage with the other owners. This will involve going through the same mortgage affordability assessments and credit checks as other mortgage applications.
Think very carefully before you get a joint mortgage as it will create a link between your credit histories.
You also need to consider what would happen if one person couldn’t pay their share of the mortgage.
What Happens When one of the Tenants in Common Dies?
When one of the tenants in common dies, their share of the property will pass to the named beneficiary in their will. This might not necessarily be the other tenant in common.
If there is no will, the rules of intestacy will be followed.
Learn More About Conveyancing
This has been part of our conveyancing guide. In the next article of this series, we take a look at the what to do if you inherit a house. To learn more, read inheriting a house.
