Joint Tenants vs Tenants in Common - Pros and Cons
(Last Updated: 30/09/2024)
23/04/2020
195
11 min read
Choosing whether to buy as Joint Tenants vs Tenants in Common is an important decision because it affects how you share income from the property; although you can change from joint tenants to tenants in common.
The legal definition of joint tenants is stated here: Law of Property Act 1925: Undivided Shares and Joint Property, Section 36 Joint tenancies.
The legal definition of tenants in common is stated here: Law of Property Act 1925: Undivided Shares and Joint Property, Section 34 Effect of future dispositions to tenants in common.
The image above is a 'best fit' for the majority of typical scenarios. If this doesn't apply to you, we might still be able to help! Speak to a member of our team If you need help deciding which tenancy is best for your circumstances.
How do you split ownership of a house?
To understand the pros and cons regarding joint tenants vs tenants in common, there are two key principles to understand:Joint Tenants
(also known as beneficial joint tenants)
- you have equal rights to the whole property (undivided share in land)
- the property automatically goes to the other owner if one of the joint tenants dies - find out if more on informing the Land Registry when someone dies.
- you cannot pass on your ownership of the property in your will to anyone other than your surviving partner if you die first (if you are the surviving partner, all the property goes to you and you can then transfer your share of the property to anyone in your will)
The legal definition of joint tenants is stated here: Law of Property Act 1925: Undivided Shares and Joint Property, Section 36 Joint tenancies.
Tenants in Common
- you can own different beneficial shares of the property (for example 50/50 or 99/1)
- the property doesn't automatically transfer to the other joint owner if you die
- you can transfer your share of property to anyone in your will
The legal definition of tenants in common is stated here: Law of Property Act 1925: Undivided Shares and Joint Property, Section 34 Effect of future dispositions to tenants in common.
Joint Tenants vs Tenants in Common - How do you choose?
The choice of how to own property is one that shouldn't be taken lightly. You should consider the following:- What happens if you die? - married couples mostly share their main residence as joint tenants to allow the property to go directly to their joint owner when they die. Read more here about the rules of survivorship for joint tenants. Joint tenancy isn't suitable for unmarried couples, because upon death the deceased party may wish their property to go to their family or, if there are children, to their children. It is also worth considering what happens if you break up. Your original intention to leave the property to the other joint tenant would mean that the partner you broke up with gets your property. Read below about how to sever a joint tenancy.
- Is this an investment? - married couples can often own investment properties as buy to lets because they might have lived in it before buying their new residence, choosing not to sell it and use it as an investment instead. If the property is an investment, then you need to consider if owning it as joint tenants is tax-efficient for you. Having an exact 50:50 beneficial share is rarely tax-efficient. If you are joint tenants and want to change to tenants in common, then read this article - Change from Joint Tenants to Tenants in Common.
- What would you do if you broke up? - unmarried couples would want the flexibility to sell the property if they break up, get their money out and move on with their lives separately. The challenge arises if one of the joint owners doesn't want to sell but can't afford to buy you out. You can force a sale but this is costly and your success rate depends on your intentions for the property when you first purchased it. Read more on this here - Can I force the sale of a jointly owned property?.
The image above is a 'best fit' for the majority of typical scenarios. If this doesn't apply to you, we might still be able to help! Speak to a member of our team If you need help deciding which tenancy is best for your circumstances.
Joint Tenancy vs Tenants in Common Pros and Cons
What are the Pros and Cons of Joint Tenants?
Benefits of Joint Tenancy
In the event of death, the surviving joint tenant owns the property 100%
- if tenants in common, the deceased's estate would look to sell the property to release the equity due to the estate.Simple beneficial ownership
- joint tenants own the property 100%, so they share income equally 50/50.Costs less in legal fees
- solicitors charge more for drafting a Deed of Trust and registering the restriction.No need to draft a will
- if your home is your only asset and your intention is to leave it to your joint tenant (husband or wife or civil partner), then you may not need to draft a will.No need to declare a From 17
- any rental income from the property is shared 50/50 and as such there is no need to declare to HMRC.
Downsides of Joint Tenancy
Risk in relationship breakdown
- joint tenants own the property 100%, in one indivisible share, so if one party pays more than the other to buy the property, this is not recognised and any gain or loss is shared equally.Can't use a joint tenancy agreement
- you cannot have a Deed of Trust when buying as joint tenants.Harder to force a sale
- if you live in the property as joint tenants, you will struggle to sell the property without mutual consent, forcing you to go to court to seek a court order.
What are the Pros and Cons of Tenants in Common?
Benefits of Tenancy in Common
Your beneficial interest is separate and can be unequal
- as tenants in common you own your own individual share of the property that belongs to you. It is advisable to draft a Deed of Trust to confirm what this share is.Reduced risk if there is a breakdown
- as long as the joint owners have drafted a Deed of Trust, the risks reduce if the relationship breaks down. As joint tenants you can't create a Deed of Trust, however, as tenants in common you can and within the deed, you can include what your beneficial interest is and what happens if either party wants to sell.Easier to force a sale
- if you have a Deed of Trust that has an exit clause then it is easier to sell the property if one party doesn't want to sell.You share goes to your estate on death
- when you die your share of the beneficial interest in the property passes to your beneficiaries in your will and not the joint owner of the property.
Downsides of Tenancy in Common
Need to draft a Deed of Trust
- a Deed of Trust details the beneficial interest shared between the joint owners. A basic Deed of Trust costs £240 INC VAT and we can draft this for you.Need to draft a will
- as tenants in common your share of your property goes to your beneficiaries on your death and not to the other joint owner. If you don't have a will then you die intestate. A basic will costs £180 INC VAT and we can draft this for you.Need to declare a From 17
- unlike with joint tenants, if you are married and own the property as tenants in common in unequal shares, then any rental income from the property is shared 50/50 and as such there is no need to declare to HMRC.
Do you need a Deed of Trust for separate beneficial shares?
Whether you buy as Joint Tenants vs Tenants in Common, you need to think through how you want to live together with your joint owner. If you are buying as tenants in common, then you are best advised to draft a Deed of Trust to set out the intentions between the beneficial joint tenants. We offer different types of deeds including:- Basic Deed of Trust aimed at married couples, long-term relationships and family members looking to declare the individual beneficial interest and confirm an exit strategy for when either party wants to sell - Read about the Basic Deed of Trust.
- Buy to Let Deed of Trust aimed at joint owners looking to share property income in a tax-efficient way, to be filed alongside a Form 17 declaration to HMRC if you are married and tenants in common.
- Floating Deed of Trust aimed at unmarried couples and friends and includes a more complex formula to calculate the beneficial interest over the life of the investment, taking into account mortgage repayments, costs of purchase/sale and developments - Read about the floating Deed of Trust.
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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Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
