Joint Property Ownership - Everything you need to know

09 February 2022

There has been a rise in recent years of friends clubbing together and buying a property. This contrasts with most joint mortgage applications coming from couples buying a home together. When buying a property with someone else, you will need to choose the right co-ownership structure for you.

Tenancy in common and joint tenancy are the two main property ownership structures in the UK and each has pro’s and con’s you need to consider. 

Here’s some key details to think about!

What’s joint tenancy?

Joint tenancy is the most common option of ownership for buyers purchasing a home with someone else, such as a partner or friend.

All buyers own the property equally and have the same rights over the home under joint tenancy, regardless of how much they contribute to things like mortgage payments, bills and maintenance.

Joint tenants also have what’s known as right of survivorship, which means when one person passes away, the ownership of the property automatically passes to the surviving owner. When the surviving partner passes away, they are free to leave the property to whomever they choose.

What are tenants in common?

A tenancy in common is another form of joint ownership, however, it sees each buyer own a specific share in the property. This could be an equal 50/50 split, or shares can be divided up in a different way. 

The ownership split can also be changed at any point should the circumstances of the owners change.

An example of this would be if one owner secures a new job and is able to pay more towards the mortgage, they may wish to have their share increased. With tenancies in common, an owner’s share can pass to a separate beneficiary rather than the other owner upon death.

The differences between joint tenancy and tenancy in common?

Joint tenancies at a glance

• Equal ownership of the property
• Equal rights over the property
• Ownership passes to joint owner upon death

Tenancy in common at a glance

• Shares in the property can be divided in any way
• Divided rights over the property
• A share in ownership can be passed to other beneficiaries upon death

Can joint ownership be changed?

Joint tenancies can be changed to a tenancy in common and vice versa.

Joint tenancy vs tenants in common

There are both pro’s and con’s to joint tenancies and tenancies in common and you will need to discuss these with the person you are buying with.

The benefits of a joint tenancy

• You can combine salaries, giving you a greater borrowing power
• Owning a property equally with another person can mean less of a burden for each owner
• Right of survivorship means each owner knows the property passes to them should the other owner pass away, this means greater security

Things to consider

• If your relationship of friendship breaks down, the amount of money each person has put into the property isn’t recognised as the shares are equal
• If one person wants to sell the property in the event of a relationship breakdown, they require the other owner’s agreement to do so

The benefits of a tenancy in common

• Each owner owns a share of the property that belongs solely to them and reflects the amount of money they put in
• If the relationship breaks down, having a deed of trust outlining what happens to each person’s share can reduce risk
• Each of the owner’s shares can be given to a separate beneficiary upon their death if they wish

Things to consider

• A deed of trust outlining each owner’s financial interest in the property will need to be drafted for a tenancy in common – resulting in more costs
• Each owner is required to draft a will if they wish their share to go to a beneficiary rather than the other owner if they die
• You should always seek independent legal advice