Joint tenants v tenants in common – what’s the difference?

We are not talking about renting here, but what happens when two or more people buy a property jointly. Legally this is called ‘joint tenancy’ and ‘tenancy in common’.

Buying a property with another person or people

Joint ownership will be the way many people own their property. A couple in a relationship, whether married or not, usually buy their property together. It offers a degree of financial security that buying separately might not. In legal terms cohabiting owners are called ‘joint tenants at law’. However, there are different types of joint ownership.

What is joint tenancy?

Joint tenancy is a type of joint ownership in which two people (usually couples but not always) buy a property together and have an equal share in its ownership. They each own the whole of the property.

What is tenancy in common?

Tenancy in common is a different kind of joint ownership. Tenants in common have specific percentage shares of the property. The exact split will be confirmed in a legal agreement, and any proceeds from the sale of the property will be allocated according to the proportion of the share held by each person.

Shares can be changed by the tenants in common, to reflect differing circumstances or life events. Someone with a 25% share in a property could increase this to 40%, for example, if this is agreed by the other party. 

What is the difference between joint tenants and tenants in common?

As mentioned above, there is no distinction in a joint tenancy between the individual shares owned by each party. The property is owned wholly by each party. Tenants in common, however, do own specific shares of the property. Perhaps the most important difference between the two types of joint ownership is what happens if one of the owners dies.

In a joint tenancy this would mean that the share of the deceased automatically passes to the surviving joint tenant. There is no option for joint tenants to bequeath their share to any other individual as part of a legacy or estate. Tenants in common, however, can leave their share to beneficiaries such as children or family members.

Joint mortgages

If a couple or a group of friends want to buy a property together, they can do so using a joint mortgage. This shares the financial responsibility between the parties and establishes joint ownership, whether through a joint tenancy or tenancy in common.

The pros and cons of joint mortgages

The biggest advantage of a joint mortgage is that it increases your lending potential. A bank or building society will base their lending decision on your joint income, and it could mean that first time buyers are able to get on the property ladder if they buy with someone else.

The main drawback of a joint mortgage is that as an individual you lose sole financial responsibility for the property. Your partner in a joint mortgage may have a poor credit history, which could impact on how much you could borrow, or affect your own credit rating; if a person in a joint ownership is unable to keep up with mortgage repayments, you could be at risk of your property being repossessed.

Your rights under joint ownership

What joint ownership does is give the ‘joint tenants at law’ rights over what happens to their property. Cohabiting joint owners have equal right to possession of the land and to occupy the property, but any action concerning the property requires joint consent. The property can’t be sold by one party without the consent of the other.

Ending joint ownership

Joint ownership can be severed by any party in a joint tenancy or tenancy in common by serving a written notice to the other parties. Consent does not have to be sought from the other parties, but the Land Registry should be informed so that a restriction can be placed on the property, preventing the other joint owners from selling or mortgaging the property.

Frequently asked questions

How do I change a joint tenancy to a tenancy in common?

This often happens when married couples split up, a relationship has ended or when couples want greater clarity and flexibility about who owns what. To switch to a tenancy in common and establish shares for each party, the joint owners will need to effect a severance of the joint tenancy by mutual agreement. The joint owners should make an application to enter a Form A restriction, by completing and signing the relevant part of the Land Registry Form SEV.

How do I change a tenancy in common to a joint tenancy?

To do this you will need to have the agreement of the other joint owners, and change the terms of the Deed of Trust. A conveyancer can help you do this, and ensure that all the correct supporting documents are included in the application.

What is a Deed of Trust?

A Deed of Trust is a legal document that states how much money each party has contributed toward a property purchase. It also includes details about what should happen to this investment in the event of a change in circumstances. For example, if the property is sold, a relationship ends, or a joint owner buys the share of the other owner. People who choose to be tenants in common may arrange for a Deed of Trust to be drawn up so that their financial interests in the property are protected.

Is it better to have joint tenants or tenants in common?

It really depends on your personal situation. If you have children that you definitely want to leave a share of a property to, then a tenancy in common may work better for you. But if you want things to be less complicated, then it may be preferable to go for a joint tenancy.

Which tenancy is best for married couples?

Most married couples prefer to be joint tenants. There are no grey areas about who the property passes to in the event of one partner’s death, and many couples prefer to have this clarity. However, it must be said that for some older married couples tenancies in common offers greater flexibility, particularly when it comes to bequests.

Though no one wants to think about separation when they are buying a house together, tenancies in common do give couples who want it added legal protection. If one party holds a specific share in a property, divorce proceedings may be a little easier to negotiate.

Let us help you find your perfect property

For all the legal implications, it’s important to remember that buying a house together is exciting. Contact haart today to find out what’s available in your area and what we can do for you to realise that dream.