Joint Tenants or Tenants-in-common | What is the best choice for couples buying a property

What’s the difference between joint owners and tenants in common?

When purchasing a property with another person you must decide how you want to hold the property once you own it.  You can own the property either as joint tenants or as tenants in common. 

Where a property is owned by more than one individual as joint tenants each owner has an equal right to the whole of the property. Should one of the owners die their interest automatically transfers to the other owner(s) under the right of survivorship; you cannot leave your share of the property to someone else.

Where a property is held by co-owners as tenants in common each owner has their own share. They may hold the property 50:50 or in differing shares should they choose to, perhaps 60:40 or 70:30. Upon the death of one owner, their share does not automatically transfer to the surviving co-owner(s) but instead will pass in accordance with the deceased’s Will or under Intestacy Rules where no Will exists.

Where a property is held as tenants in common, a restriction is placed on the title to the sale of the property by a sole proprietor. This means that the property can only be sold where at least two people are involved as transferors.

When you instruct us to act for you in a property purchase where you will be buying with another person, we will ask you to confirm how you wish to hold the property on completion. There is no right or wrong answer, your own opinions and situation will inform you as to how to instruct us.

So how does this affect you?

How you wish to hold a property, when purchasing with another person, will depend on your own set of circumstances. When purchasing a property for the first time with your partner then it can be extremely exciting and thinking about how things might be divided should you ever split up might not be at the forefront of your mind. However, thinking about things properly before you buy is likely to make things easier should you separate in the future. 

Where each individual is contributing different amounts, it may make sense to own the property in shares reflecting those sums, or a declaration of trust could set out each parties’ interest succinctly. For example: John and Steve are buying a house together and John is putting in £10,000, whilst Steve is contributing £50,000.  In this instance it would be common for a declaration of trust to confirm that upon the resale of the property, after costs and fees are paid, that the first £60,000 will be divided £10,000 to John and £50,000 to Steve with the balance of the proceeds being split 50:50 thereafter. They would hold the property as tenants in common, subject to the declaration of trust they signed when they bought the property. Each of them benefits equally from any profit they have made but they both receive the sum they initially invested.

It is also common for couples who have been married previously and have children from those relationships to want to protect their financial interest for their children. In these circumstances, many couples choose to own the property as tenants in common so that their share of the property can be left to their children upon their death.

Depending upon your situation, it may be sensible to have either a declaration of trust or co-habitation agreement drawn up, declaring who owns the property in what shares. Our wills, trusts and probate and family departments will be able to help and advise you further should you want assistance.