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Joint Tenancy or Tenancy in Common

If you are buying a property with someone, it is essential that you choose the right structure for your purchase. There are two main ways to purchase a property with other people. They are Joint Tenancy or Tenancy in Common.

Tenancies in Common and Joint Tenancies allow people to co-own a property. However, they are set up in slightly different ways and have different rules.

Tenancy in Common

In a tenancy in common agreement, two or more people can hold an interest in a property. Typically each person owns an equal share; however, each person can hold different shares.

Each person owns a separate share in the property and is entitled to leave their share to chosen beneficiaries in a Will. If you do not have a Will, your share will pass to your nearest living blood relatives according.

There are certain situations where a tenancy in common is more suitable than a joint tenancy.

  • A tenancy in common is suitable for people who want to purchase a property with their friends or family.
  • A tenancy in common agreement is also ideal for those who wish to own property jointly with their partner but wish to leave their share of the property to someone else when they die.
  • This type of tenancy is also suitable for people who have children from a previous marriage as they can leave their share of the property to their children in their Will.
  • This type of tenancy can also help people reduce care home fees as they will only be means-tested on their share of the property.

The main differences between joint tenants and tenants in common?

With a joint tenancy, when one partner dies, the property is automatically given to the surviving owner. Tenancy in common allows you to leave your share to other beneficiaries in your will.

Tenants in common can have different percentages of ownership interest in a property. This can be useful if one person puts in a significantly higher deposit than the other.

Joint tenants are registered on the same deed at the same time. However, you can obtain an interest in a property at any time after the other co-owners initially set up the tenancy in common.

What are the potential drawbacks of tenancy in common?

A tenancy in common is often a great way for family and friends to co-own a property. However, there are a few potential problems that you should be aware of before you decide to go down this route.

  • If a co-owner dies without leaving a will, the property will go through probate which can be time-consuming and expensive
  • If one tenant wants to sell the property, they can force the other tenants to sell, even if they don’t want to, by filing a partition action.

Can you change to tenants in common?

You can change from a joint tenancy or sole owner to a tenancy in common at any time.

To make the change, you undergo a “severance of tenancy’ and send a form to HM Land Registry’s Citizen Centre. There is no charge for the change. However, if you want a solicitor, conveyancer or legal executive to do this, you will have to pay their fees.

You may want to change from joint tenants to tenants in common if you divorce or separate from your partner and want to leave your share of the property to someone else.

If you want to know more about your mortgage options, give us a call on 0203 0111 898 to speak to one of our advisors.