Tenants in common vs joint tenants
Key Takeaways
- Joint tenancy means both owners hold equal shares and have equal rights to the property, regardless of individual contributions. Upon one's death, the property automatically transfers to the surviving owner.
- Tenancy in common allows owners to hold unequal shares based on their contributions. Each owner's share can be bequeathed to someone else through their will, providing flexibility in inheritance.
What is joint tenancy?
Buying a property as joint tenants means that you both have an equal share and equal rights to the whole property. You effectively own 100% of the property together, and neither tenant has a specific share that is theirs.
It doesn’t matter how much either tenant contributed to the deposit or pays towards the monthly repayments; the property is still owned equally. Each tenant is entitled to 50% of the sale proceeds when the property is sold.
Entering into a joint tenancy also means the property will automatically go to the other tenant if one of you dies. It’s not possible to leave your share of the property to someone else in your will.
Pros and cons of joint tenancy
Pros of joint tenancy
The most straightforward type of property ownership
All owners have equal rights to the property
It may mean you don’t need to draft a will
Suited to couples who want their partner to inherit their share of the property
Lower legal fees and documentation required
Cons of joint tenancy
Proceeds of any sale are split 50/50, even if one tenant has contributed more towards the property
All parties need to agree to sell the property
You can’t pass your share of the property to someone else in your will
You cannot use a deed of trust to separate a share of the property
What is tenancy in common?
If you buy a property as tenants in common, you can have different shares. For example, if one of you provided 75% of the deposit and will be contributing 75% of the repayments, you could divide the property on a 75/25 basis.
This is a popular option if buying with friends or for parents who want to help their child get onto the property ladder. It means your share of the property won’t automatically go to the other owners after you die, and you can choose who it goes to in your will.
Tenancy in common can be more flexible because the share can be updated over time. For example, if one owner contributes more towards the repayments or pays off a lump sum of the mortgage, their overall share can be increased.
Pros and cons of tenancy in common
Pros of tenancy in common
Each tenant owns their share of the property
You can leave your share to whoever you choose in your will
All owners have equal rights, no matter their share size
You can use a deed of trust to agree on what will happen if one owner wants to sell the property
Owning an unequal share can be more tax-efficient
Cons of tenancy in common
Getting a deed of trust can be expensive
You will need to have a will to confirm who you want your share to pass to
The other owner could sell their share to anyone without needing approval from you
You may need a Form 17 if you receive rental income from the property
Differences between joint tenancy and tenancy in common
Here’s a breakdown of the key differences between joint tenants and tenants in common.
Property ownership
Joint tenancy: Each tenant has an equal share in the property, and any proceeds from a sale must be split evenly.
Tenancy in common: You can split the ownership however you like between the owners, for example, 60/40.
Inheritance after death
Joint tenancy: The property will automatically pass on to the surviving owners, and there is no option to leave your share to someone else in your will.
Tenancy in common: Your share will become part of your estate when you die and can be passed on to the beneficiaries of your will.
Mortgage
Joint tenancy: To own a property on a joint tenancy basis, you must have a joint mortgage. Joint mortgages are usually taken out between two people, but most lenders allow up to four borrowers.
Tenancy in common: It is possible to take out your mortgage that just covers your share of the property; however, in reality, very few lenders allow this, so you’ll need a joint mortgage.
Inheritance tax
Joint tenancy: You will not be charged inheritance tax when you die because your share automatically passes to the other owner.
Tenancy in common: Your share of the property will be added to your estate when you die, which will be liable for inheritance tax.
Can I switch joint ownership type?
It is possible to change from a joint tenancy to a tenancy in common or vice versa at any time. You can also change from being a sole proprietor to joint tenants or tenants in common if you want to add someone as a joint owner of your property.
Changing a joint tenancy to a tenancy in common
Changing a joint tenancy to a tenancy in common is known as ‘severance of joint tenancy’.
To do this, you need to apply for a Form A restriction. A solicitor can make the application for you, and you can make this change without the other owners' agreement.
However, if the other owners haven’t agreed to the change, you must give them a written notice. You’ll need to supply a copy of the notice of severance signed by the other owners.
You should send the form and any supporting documents to HM Land Registry. There is no fee for making this change.
Changing a tenancy in common to a joint tenancy
All joint owners must agree to change from being tenants in common to joint tenants.
You will need to fill in a new or updated trust deed, which you’ll need to get a conveyancer to help with. You’ll also need to complete a form to cancel a restriction if one has been registered.
You should then send the form, trust deed (or a certified copy), and other support documents to the HM Land Registry.
Which option is right for you?
It is ultimately up to you and the person with whom you buy a property to decide which ownership type is best for you.
Typically, a joint tenancy might be the right option if you:
Are in a long-term relationship or a married couple
Want the property to go to the other owner when you die
Want to share equal ownership of the property and proceeds
A tenancy in common may work best if you:
Are buying with friends
Have made unequal contributions to the purchasing the property and want that to be reflected in the ownership of the property
Want to leave your share of the property to someone other than the other owner(s)
If unsure, speak to the solicitor or conveyancer dealing with your purchase. They can help outline the legal implications of each option and help you make a decision that works for you.
Our expert says
“Choosing between joint tenants and tenants in common is a big decision. To make the right choice, it’s vital you understand the difference between the two.
When deciding, think about who you want to leave your property to when you die and how you would split the proceeds of a future sale. If you’re unsure, always get legal advice so you understand each option's implications.”
“Choosing between joint tenants and tenants in common is a big decision. To make the right choice, it’s vital you understand the difference between the two.
When deciding, think about who you want to leave your property to when you die and how you would split the proceeds of a future sale. If you’re unsure, always get legal advice so you understand each option's implications.”
Jonathan Bone, Mortgage Lead.
Joint tenants vs tenants in common FAQs
If you want to leave the property, the other owners need to agree. You all have equal rights to live in the property, and you can’t force them out if you want to sell.
You may need to seek a court order to resolve this, but this can be expensive and stressful. If you are tenants in common, it’s a good idea to draw up a deed of trust before you move in that can confirm rules for things like:
Under what circumstances the property can be sold
How much of the sale price each tenant is entitled to
How much notice one of the owners needs to give if they want to sell
If you are joint tenants and don’t want to go to court, you could arrange for the owner(s) to remain in the property to buy your share.
A deed of trust is a legal document that outlines the division of property ownership. The deed confirms exactly what percentage of the property each tenant owns and can include the following:
What happens if one owner wants to sell
How much each owner paid towards the property
Any changes to ownership, for example, if one owner pays for renovations or personally pays off a lump sum of the mortgage
Any third parties that have contributed towards the purchase of the property
A deed of trust is commonly used by tenants in common to confirm how the ownership of the property is split legally.
If one of the property owners passes away, the other owner's share of the property will automatically pass to the other owner if you are joint tenants.
If you are tenants in common, their share of the property will be added to their estate and, therefore, can be passed on to the beneficiaries of their will. The share will be inherited under intestacy rules if they don't have a will.
Yes, you and the other owner(s) must use a joint mortgage when buying a property as tenants in common. It may be possible to mortgage each share of the property separately, but very few lenders offer this option.
Getting a joint mortgage with someone else is a big commitment, and it means you’ll be financially associated with them, which could negatively impact your credit rating.