Co-Ownership of a Property: The Difference Between Joint Tenancy and Tenancy In Common

Senior conveyancer Karen Pratt, in our Residential Property team, explains the difference between being joint tenants and tenants in common when purchasing a property with someone else.

Purchasing a home in the current market can be a minefield of paperwork and forms to complete. If you are buying with someone else, to pool funds and cover costs, your solicitors will ask you to complete a form on how you are going to jointly own and hold the property.

Below are details of the options, with examples of why they may be right or wrong for you.

What is a "joint tenancy"?

A joint tenancy (being joint tenants) is a type of ownership in which each person owns a 100% stake in the property. This means you can’t leave your share of the property to a third party in your Will. If either of you die the property will automatically pass to the other co-owner. 

This type of ownership is normally favoured by couples who are married or in long term relationships, as well as family members.

The benefit to a joint tenancy is that it is the most simplistic form of property ownership. All parties will have equal rights.

The downside is that if a relationship breaks down and when the property is being sold the proceeds will be split 50/50 Irrespective of who paid what in the first instance or during the ownership of the property. So, if your inheritance from “grandma” was used as the deposit, or you paid for the addition of a conservatory for example,  this will not be taken into consideration and you will not get this money back when the house completes on its sale.

Pros	Cons
The simplest form of property ownership.	Doesn’t allow for unequal ownership.
Lower legal fees and fewer 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 the consent of all parties.
Ideal for couples who want their partner to inherit their share when they die.	Were 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 a  “tenancy in common”

A tenancy in common (being tenants in common) may be used if you are buying with a friend or sibling, or your partner. You can nominate different shares of the property, for example 70/30, if required. This tends to be nominated when one party is investing more upfront, towards the deposit for example.

An individual may want to protect the money they have contributed “to the pot”. Solicitors will discuss these details with their clients and ask why there will be unequal shares and suggest a declaration of trust. This is a deed that is drafted and names the parties involved in the purchase, not only the buyers but mortgages and possibly third parties who gifted funds. This will be signed before exchange by the buyers and held safely by the solicitors acting for them.  

The important point to remember here is that the property doesn’t automatically go to the other owners if you die, unlike with joint tenancies. You can pass on your share of the property in your Will, so it is important to ensure that this is updated following completion.

Pros	Cons
Each part owns a separate share of the property.	A deed of trust is an extra expense, normally around £240.
Easier to force a sale.	You will need a Will to set out who your share should pass to when you die.
You can leave your share to whoever you wish 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 shares to anyone, without approval from other co-owners.
A deed of trust can simplify things in the event of a separation or other issue.	Unmarried partners won’t automatically inherit the other’s share of the property.

You can change your mind

The option that is best for you may change over time, especially if your personal circumstances change. 

You can change from being joint tenants to tenants in common if you divorce or separate and want to leave your share of the property to your children or someone else.

You may want to change from being tenants in common to joint tenants, for example if you get married and want to split everything 50/50. The good news is it is free to make these changes at the Land Registry. 

You can also change from sole ownership to being tenants in common or joint tenants, for example if you want to add your partner as joint owner. This is called transferring ownership.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.