Joint tenancy or tenancy in common, which is right for me?

From a Legal perspective there are two ways of owner property jointly. You can either own it as ‘joint tenants' or as ‘tenants in common'. The terminology has nothing to do with (rental) tenancies, freehold and leasehold land ownership, or the mortgage, but instead governs the treatment of assets on death.

Joint tenancy

Under a joint tenancy, the owners together own the whole of the property and neither has an absolute share in it. If one party dies, the right to survivorship rules apply and the survivor(s) automatically takes possession of the deceased’ share. This would apply even if a will has been made explicitly stating otherwise, and therefore would not usually be suitable for friends buying together.

Tenancy in common

Unlike a joint tenancy, a tenancy in common agreement specifies that each party owns a definite share of the property. For example, two friends buying together might own 50% each, or perhaps a 60%/40% split might apply. The benefit is that if one of the owners dies, their share passes according to their will or the rules of intestacy if no will has been made. This therefore, is usually appropriate for friends who buy together. Problems which need to be considered can still arise for the survivor(s), for example if a relative inherits a share of a jointly owned property, they may wish to sell out and realise the capital, forcing the remaining inhabitants to sell or buy them out. In these instances, a simple life insurance policy could provide the necessary capital to avoid this pitfall.

Which is suitable?

This is dependent upon individual circumstances, current and future objectives. In most circumstances married couples opt for joint tenancies for simplicity and where there is little benefit in having separate shares on death. Where owners are not married, such as brothers & sisters, friends, unmarried couples, a tenancy in common is often used to ensure that each party can pass on their own share as they so wish.

The arrangement and administration of the tenancy is done through a solicitor or conveyancer who can provide guidance and assist in other legal areas, however having a good idea which is suitable for you in advance can save time and money.

Please note, the rules differ in Scotland.

Some other issues to consider when buying jointly:

  • Long Term Objectives
  • Financial Position(s)
  • Obtaining a Mortgage
  • Credit History
  • Personal situation(s)
  • Possible changes to any of the above

Your home may be repossessed if you do not keep up repayments on your mortgage.

For mortgage advice we can charge a fee of typically £500 or we can receive commission from the lender.

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