Change From Tenants in Common to Joint Tenants

People who jointly own property sometimes change their ownership structure from tenants in common to joint tenants. This is often done when a couple's relationship changes, such as married couples or civil partners who own buy-to-let properties. There are a few reasons why someone might want to make this change:

• One partner is no longer a higher-rate taxpayer.
• Tax laws have changed.
• A couple wants to share their family home equally.

The change in title means that the joint tenants benefit from:

• Joint property ownership: All owners have a shared ownership of the entire property.
• Right of survivorship: If one joint tenant dies, their share automatically passes to the remaining joint tenant(s). This happens regardless of what's stated in their will.

The difference between joint tenants and tenants in common

Before deciding to change your property ownership structure, you should understand the difference between tenants in common and joint tenants (often written as joint tenants vs tenants in common).

Ownership shares

In a tenancy in common, each owner holds a distinct share of the property. These shares can be equal (e.g., 50/50) or unequal (e.g., 70/30). In a joint tenancy, all owners hold equal shares of the entire property; there are no individual shares.

Inheritance

The most significant difference is how property ownership is passed on after death. With tenants in common, an owner's share is passed on according to their will. This means it can go to anyone they choose, not necessarily the other property owners.

With joint tenancy, the "right of survivorship" applies. If one joint tenant dies, their ownership automatically passes to the surviving joint tenant(s), regardless of what their will says.

The sale or other ownership transfers

A tenant in common can sell or transfer their share of the property without needing the consent of the other owners. A joint tenant cannot sell or transfer their share independently; all joint tenants must agree.

Free initial advice on how our deeds can work for you

Arrange a free consultation with one of our experienced conveyancing executives if you are:

• Severing joint tenancy to register as tenants in common, or vice versa.
• Buying with your unmarried partner, to protect your shares in case the relationship breaks down.
• Married or civil partners let a property, and one of you is in a lower tax bracket.
• Buying with friends or family, to protect shares based on initial and ongoing contributions from each party.
• Going to invest money in unequal shares, improvements, or renovations on the property.
• Buying a property with a mortgage, where one or more borrower(s) will not be a legal proprietor.
• Unable to buy the other owner out and want to surrender your share.

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How do you change from tenants in common to joint tenants at the Land Registry?

The process of removing a tenancy in common restriction at the Land Registry is complex, especially if there are already legal documents like a Deed of Trust or a Deed of Assignment. It's strongly recommended to involve a specialist solicitor throughout the process.

Instruct a Specialist Solicitor

Getting specialist help to change the title ownership of your property is important because to change title ownership, you need to remove restrictions and therefore require legal advice to understand the implications of moving forward with the removal.

A Deed of Trust will also need to be drafted and completed to confirm the change in beneficial interest.

Complete Land Registry Forms

Your solicitor will handle the completion and submission of the necessary Land Registry forms, which include:

• Form RX3: This form cancels the restriction on the title. You can Download a Form RX3 here.
• Form ST5: This is a statement of truth to cancel a Form A restriction. You can Download a Form ST5 here.

Draft a Deed of Trust

Your solicitor will draft a new Deed of Trust to reflect the agreement to share the beneficial interest as joint tenants.

Send documents to the Land Registry

Your solicitor will submit all the necessary forms and payment to the Land Registry.

(if applicable) Update HMRC

If the property was a rental and the joint owners are married/civil partners and both legal owners, you'll need to inform HMRC with an updated Form 17.

What are the risks of owning the property as joint tenants?

Changing from tenants in common to joint tenants alters how each owner benefits from the property, especially if it's sold or generates rental income.

For example

Imagine Sarah and Mark own a rental property. As tenants in common, Sarah owns 70% and Mark owns 30% for tax reasons. They decide to become joint tenants. This means they now each effectively own 50%.

If they later separate, this 50/50 split could be disadvantageous to Sarah, who originally had a larger share. Disputing this in a TOLATA claim later could be difficult.

Need to remove a restriction from your title?

• Experts in removing a charge, bankruptcy order, Form LL, Form A, and Form B.
• Can draft a Deed of Trust to protect your interest in a property within 1-2 days.
• Fixed fee conveyancing.
• Experienced with RX3, RX4, and ST5 forms.
• We can solve any property challenge.

Our solicitor will review your restriction to help you determine your next steps for a fixed fee of £99 INC VAT.

Review my Restriction

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When should you not change to a joint tenancy?

While joint tenancy offers several advantages, it's not always the best choice. Here are some situations where remaining as tenants in common might be more suitable:

Unequal financial contributions

If one owner has contributed significantly more financially to the property (e.g., a larger deposit), changing to a joint tenancy would mean they effectively give up a portion of their initial investment. Tenants in common allow ownership shares to reflect these unequal contributions.

Complex family situations

In blended families, where each partner has children from previous relationships, joint tenancy can create unintended consequences for inheritance.

If one partner dies, their share would automatically go to the surviving partner, potentially disinheriting their children. Tenants in common allow each partner to specify in their will how their share should be distributed.

Business partnerships

If the property is owned as part of a business partnership, tenants in common are generally preferred. This allows for more flexibility in managing ownership and transferring shares within the business structure.

What tax do you pay when changing ownership?

Changing from tenants in common to joint tenants might incur tax payments. It's important to understand these before making any changes.

Capital Gains Tax (CGT)

• If you sell the property, CGT is generally calculated based on each owner's share of the gain.
• As tenants in common, your CGT liability is usually based on your individual ownership percentage.
• As joint tenants, your CGT liability is typically split equally, regardless of your original ownership shares. This could have significant tax implications depending on your individual income tax brackets.

Inheritance Tax (IHT)

With joint tenancy, the entire property is considered part of the surviving owner's estate for IHT purposes. This can potentially increase their IHT liability.

Rental income tax

If the property is rented out, rental income is typically split equally between joint tenants for tax purposes, regardless of their original ownership shares. There are ways to reduce this by using your partner's taxable income allowance.

Important Note: Tax laws can be complex and change frequently. This is a general overview and should not be considered professional tax advice.

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What happens after you instruct? 1 We review the information you sent. 2 You sign and witness the ST5 and RX3 and send it to your solicitor. 3 The solicitor submits the documents to the Land Registry. 4 We email you the updated title - this can take 1 to 6 weeks due to Land Registry backlogs.

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Can you change title ownership without the other owner's consent?

Changing ownership without consent is illegal. Form RX3 warns that providing false or misleading information to gain a benefit or cause loss to another person could be considered fraud under Section 1 of the Fraud Act 2006. This carries a maximum penalty of 10 years imprisonment or an unlimited fine, or both.

Form RX3 states:

"If you dishonestly enter information or make a statement that you know is, or might be, untrue or misleading, and intend by doing so to make a gain for yourself or another person, or to cause loss or the risk of loss to another person, you may commit the offence of fraud under section 1 of the Fraud Act 2006, the maximum penalty for which is 10 years imprisonment or an unlimited fine, or both"

Can you change your own title (without a solicitor)?

It's technically possible to attempt this process yourself, but it's highly discouraged. Even the RX3 form warns that errors could lead to a loss of protection under the Land Registration Act 2002.

RX3 form states:

"Failure to complete this form with proper care may result in a loss of protection under the Land Registration Act 2002 if, as a result, a mistake is made in the register"

It is best to leave changing the beneficial ownership of the property to a qualified solicitor.