Heide's Blog - 24th July 2020 - Swift Mortgages & Finance

Home Ownership: Joint Tenants or Tenants in Common?

When you buy a property with another person or persons there are 2 ways in which you can own the property.

These are as Joint Tenants or Tenants in Common.

But what is the difference between them?

Joint Tenants

Joint tenancy is a legal arrangement in which two or more people own a property together, each with equal rights and obligations. When one of the owners in a joint tenancy dies, that owner’s interest in the property passes to the survivors, without having to go through the courts.

When you own a property as a joint tenant, each of the joint tenants (each owner) owns the whole of the property and nobody has a specific or identifiable share.

On death, the surviving joint tenant(s) will own the whole of the property, regardless of any wishes you may have made in your Will regarding the property. This is known as Right of Survivorship. This is commonly the situation with married or co-habiting couples who what the property to be passed to each other on death.

Bear in mind if you have children from a previous marriage and you enter a joint tenancy ownership with a new partner, your children will not automatically inherit a share of the property.

Tenants in Common

Tenancy in Common is a legal arrangement where two or more people share the ownership rights in a property or piece of land. When a tenant in common dies, the percentage of the property owned by that individual passes into their estate.

If you co-own a property as tenants in common, each co-owner owns a specific share of the property. This is often a 50% share (if there are 2 owners), however it is possible to hold unequal shares.

One reason you may wish to own unequal shares in a property is for tax purposes. For example, if you own a buy to let property and one of the owners does not work or perhaps is a lower rate taxpayer then they might own the majority share in the property. For example, 90%. This means the lower rate taxpayer would be responsible for paying 90% of the income tax due on the rental income – rather than the higher rate taxpayer. It is imperative you speak to your tax advisor or accountant prior to taking any decisions regarding your tax affairs.

As you each own a separate share in the property you are all entitled to leave your individual share to your chosen beneficiaries in your Will. This may be considered by people who own property together but wish to leave their share to another beneficiary. For example, those with children from a previous marriage to ensure their children will benefit from their estate when they die, provided they have written a Will.

Without a Will, your share of the property would be passed to your nearest living blood relatives according to the Rules of Intestacy (law).