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Joint tenants or Tenants in Common: which is best for you?

Date Added 01.05.24

Purchasing a home is an exciting experience and a goal many in the UK aspire to achieve. So many in fact that a recent survey from the Homeowners Alliance found that just over 7 in 10 Brits who are not homeowners wish to own a home in the future, despite over half (52%) thinking they will never be able to do so.

With this unconfident look of getting on the property ladder, the only hope many see of actually achieving their goal is buying jointly with another person.

Purchasing a home with another person enables you to:

• Potentially afford a bigger mortgage;
• Share the responsibility of monthly repayments;
• Pool together savings in order to afford the required deposit;
• Split other costs such as Stamp duty and legal costs.

However, whether you are buying with a partner, friend, or colleague, it can be all too easy to overlook the legal implications that come with this type of arrangement. These implications could resurface at a later date, so addressing them at the start of the purchasing process is advisable.

The major point to discuss at the outset is how the property will be held between you and your co-buyer(s). There are two options you can choose: joint tenants or tenants in common.

But what’s the difference? Which one is best? Keep on reading this post to find out.


What are Joint Tenants?

When a property is held as joint tenants, it means that the parties who co-own the property have equal rights and obligations for the entirety of the property. Each party owns 100% of the home as far as the law is concerned. This means that to sell, all of the owners have to agree.

It also means that a joint tenant cannot leave part of the property to someone else in a will. So if one of the joint tenants passes away, the property automatically passes to the other owner(s) and is known as the ‘right of survivorship’. It also means that the value of their share does not form part of their estate, so it is not regarded as an asset on death.


What are Tenants in Common?

When you buy and co-own a property as tenants in common, there is no obligation for ownership shares of the property to be equal. Ownership splits, such as a 60:40 or 70:30 split, are decided by the owners of the property at the start of the buying process.

Unlike joint tenants, tenants in common can leave their share in the property to anyone they like in their will. When a tenant in common dies, their share passes to the person named in their Will or Trust Deed or to their next of kin. The value of this share is then calculated and forms part of their estate.

Tollers Conveyancing solicitors advise people entering into an agreement as Tenants in common to sign a Declaration of Trust to set out the distribution of shares on sale or death, for instance, if a couple are contributing different amounts of money towards the purchase price, that Trust Deed may provide that the original contributions are returned to the respective buyers, but that they share equally in any increase in value from the date of their purchase.

 

Joint Tenants vs Tenants in Common

There are pros and cons for both types of ownership, which can be dependent on the relationship between the buyers as well as their personal circumstances. The below table provides a summary of some of the differences:

 

 

Tenants in Common

Joint Tenants

What is the allocation of ownership?
Every owner (up to 4) each owns a specific percentage share of the property. These percentages can be any size. All ownership parties will have equal rights and 100% ownership of the property as a whole.

Right of survivorship?
No. Yes.
What type of people typically select this option when buying a property?
Friends, joint venture partners, relatives, people with children from a previous relationship. Spouses or partners.

Who receives your share on death?
Your share will form part of your Estate and your Executors will distribute this
The joint owner will have no claim on your share unless you have provided for this in your Will.
As there is a right of survivorship, the joint owners inherit the property,
You are unable to pass any interest in the property in your Will.

 

So which is best?

When it comes to selecting between tenants in common and joint tenants for property ownership, the choice ultimately hinges on what aligns best with the buyer’s personal preferences and circumstances.

For example:

Joint tenants may be the best choice if you are purchasing a property with a long-time spouse/partner where your financial contributions will be equal.

whereas,

Tenants in common may be the best option if you are buying with a group of friends where the amount you contribute financially is different.

Talk to Tollers

At Tollers our highly experienced Conveyancing team ask their clients at the very start of the process to state their preference after explaining their meanings and the ramifications to them.

If you’re seeking expert guidance for your Joint property purchase…Talk to Tollers on 01604 258558 our team is on hand to provide you with the advice you need.

 

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