Home ownership: joint tenants or tenants in common?

This guide offers a detailed overview of different home ownership options and explains why the choice you make now will matter in the future.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Are you thinking of buying a home with someone else? When you buy a home with another person or persons, you have two choices of how you own the property.

  • Joint tenants own the property equally 

  • Tenants in common can have equal shares or they could split the ownership giving one person a higher share than the other or others

This guide explains in more detail what this means as there are implications for whichever home ownership route you choose and the decision could be important in the future.

What does joint tenants mean?

Let’s start by explaining about joint tenants, also known as beneficial joint tenants. Once you know what joint tenancy means, it will be easier to understand the meaning of tenants in common.

Couples often opt for joint tenancy so they jointly own the property equally. If there are more than 2 owners all participants own equal shares. So, if 4 friends are buying together, they will all own a 25% share of the property if they opt for joint tenancy.

You do not need any special documentation setting out the terms of the joint tenancy as it is a simple equality of ownership. Even if one person contributes more to the deposit and/or monthly payments, ownership is still a 50/50 split in the case of 2 people.

When it comes to selling the property both or all parties must agree and sign the transfer deed and any profit from the sale will be split equally. 

One of the advantages of being joint tenants is that if the property is owned by 2 people and 1 dies, the surviving partner automatically takes full ownership of their home. This is called the ‘right of survivorship’. The person who has died cannot pass his or her ownership of the property to someone else in their will.

What does tenants in common mean?

As tenants in common you have a choice of how you split the ownership share. There are also different rules around when one owner dies and you can pass on your share of the property in your will to whoever you like.

You can split the share of the home equally but you might decide that if one person contributes more financially, they should own more legally.

For example, if Chris puts up 75% of the deposit and the monthly repayments and Sam contributes 25%, they may decide to be tenants in common on that 75/25 percentage basis. However, both Chris and Sam have the right to access all of the property.

Tenants in common agreement

If you opt to be tenants in common you should draw up a Deed of Trust, also known as a Declaration of Trust. Although this is not a legal requirement, it is sensible to have a document which makes it clear who owns what. This should make things easier if the relationship between the owners starts to dissolve in the future.

A Deed of Trust can be entered into when you buy the property or later on or if there is a change of ownership. It needs to be signed by a witness, preferably someone who is not a relative.

Land Registry tenants in common

Let your solicitor or conveyancer know you are tenants in common and they can register this on the title deeds at the Land Registry. 

This is called a Form A restriction and will inform anyone looking at the register that there are separate owners of the property. This is important when the property is sold. If there are 2 tenants in common, both must sign the sale documents. 

Each co-owner will receive the percentage of any profit from the sale stated in the Deed of Trust. In our example above, Chris would receive 75% and Sam would get 25% from the sale of the property.

Solicitors and conveyancers can draw up a Deed of Trust and there are also online firms that specialise in it.

What are the benefits of tenants in common?

Being tenants in common could be beneficial if you need full time care or move into a care home in the future. You will be means tested on your share of the property only, rather than 100% of it. This could mean a reduction in the care fees you have to pay.

Tenants in common can also sell their share of the property, either to their co-owner/s or to an external party.

What happens when one of the tenants in common dies?

When one of the tenants in common dies, their share of the property passes to their estate. Tenants in common should specify in their will who they want to leave their share to. If there is no will, that share will go to the nearest living blood relatives.

This type of agreement could be good for people who want to live with their partner and jointly own the property. But they may prefer to leave their share of the property to someone else when they die. 

This is often the case for people who have children from a previous marriage as they can guarantee their children will benefit from their estate when they pass away, provided they have written a will.

When one partner dies, the surviving owner keeps their share of the property but the rest is now owned by whoever was named in the other person’s will. Decisions will need to be made as to what happens to the property now. 

Both parties could sell the property and divide the proceeds between themselves according to their percentage share. Or the surviving person can stay in the property and come to some arrangement with the inheritor regarding the other share. 

Is a tenants in common mortgage agreement a good idea?

Choosing whether to be joint tenants or tenants in common very much depends on your personal circumstances.

Generally speaking, married couples or live-in partners with or without children tend to opt for joint tenancy as it ensures if one partner dies the other can remain in the family home.

For homeowners who are unrelated such as friends, the tenants in common option gives them more freedom to sell their share if their circumstances change in the future. 

Family relationships can be complicated with second and third marriages and people wanting to leave their share of a property to children from a previous marriage or relationship. Tenants in common might be better under these circumstances.

But there are no hard and fast rules so if you are unsure whether to be joint tenants or tenants in common you should seek legal advice.

Changing a tenancy

Whether you start off as joint tenants or tenants in common, you can change to the other type of tenancy whenever you like. You might want to do this if there has been a change in the relationship.

Either way you will have to inform the Land Registry of any change of tenancy so it can amend the title deed to the correct ownership arrangement. 

Change from joint tenants to tenants in common 

If you are joint tenants wanting to become tenants in common, all parties must sign a ‘notice of severance’. If only one person wants to change the tenancy, they will need to serve the notice of severance on the other owner/s.

Once the notice of severance has been signed by one or all of the parties the ownership arrangement turns to tenants in common. You should also consider setting up a Deed of Trust, as mentioned earlier in this guide. 

Change from tenants in common to joint tenants

If you are tenants in common and you want to become joint tenants all parties must be in agreement. 

The process is more detailed than changing from joint tenants to tenants in common and a solicitor, conveyancer or legal executive can make the application for you.

You need to fill in a new or updated trust deed, cancel the Form A restriction at the Land Registry – this is no longer necessary as you both own all of the home.

There are other documents too including:

  • A certified copy of the transfer of ownership showing the tenants in common have transferred their share to the joint tenancy

  • A certificate from your conveyancer confirming that all owners with shares of the property have signed a new trust deed

  • A statutory declaration prepared by your conveyancer

  • A signed statement of truth stating: “I believe that the facts and matters contained in this statement are true”

Transferring home ownership

If you have been living on your own and a partner moves in you may want to consider adding their name to the title deeds, particularly if you have children together.

You can change from sole ownership to either joint tenants or tenants in common. This is known as transferring ownership.

If you have a mortgage, you will need to inform your lender who will carry out credit and affordability checks on your partner, even if they are not intending to contribute to the mortgage. 

The lender will want to see all the usual mortgage application requirements such as income details, bank statements, identity check and so on. If he or she passes this they can be added to the mortgage but there will be an administration fee. 

If your lender refuses, you could try remortgaging to another lender. Watch out if you have a mortgage that has early repayment charges as  you will need to take that into account or wait until the deal has expired. A valuation on your property will also be carried out if remortgaging to another lender and there will likely be a fee for that.

It will also be necessary to instruct a solicitor or conveyancer to register the new ownership details with the Land Registry, known as a ‘transfer of equity’.

If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.