When you buy a property with another person, whether that’s a spouse, a partner, a friend or a relative, you’ll need to decide how you want to legally own the property. The two most common ways are as joint tenants and tenants in common.
While both options give you shared ownership, each works differently from the other, so choosing the right option for your circumstances is essential. One of the main differences is what happens when one of the owners passes away or wants to sell the property.
In this article, we take a closer look at joint tenants and tenants in common to determine what each is and the differences between the two processes to help you make a more informed decision before you sign on the dotted line.
What is tenants in common?
Tenants in common each have a defined share of the property. These shares don’t have to be equal, and you can split them however you agree to. A common way to decide the split of shares is by the amount each person invested. If one person invested a lot more than the other, then you may decide to split it in a way that reflects this.
As the shares are independent of each other, they do not automatically transfer to the other owner if one owner dies. Each can leave their share of the property in a Will to someone else.
For example, Matt and Jane buy a house as tenants in common. The house cost £300,000, Matt put a £30,000 deposit, while Jane contributed £15,000. They decided to split the house shares, with Matt having 67% and Jane having 33%. Jane leaves her share to her son in her Will when she dies.
Consider Tenants in Common if:
- You’re buying with friends or family
- You’re contributing different amounts
- You want to leave your share to someone else
- You want greater control over your share
What is a joint tenant?
A joint tenant is when two or more people buy a property together, and they each have equal rights and responsibilities. There is no split of shares, regardless of whether one owner contributed more than the other. If one owner dies, their share of the property automatically passes to the other joint tenant or tenants.
This is known as the Right of Survivorship and overrides any wishes set out in the deceased’s Will. For example, Jack and Sam are joint tenants. Jack invested more than Sam, but they opted for joint tenant ownership. Jack says he will leave his share of the house to his son, but as joint tenants, Jack’s share of the property will go to Sam, and she’ll become the sole owner.
You might want to consider joint tenancy if:
- You’re married or in a civil partnership
- You want your partner to inherit your share automatically
- You’re both contributing equally
- You want a simple ownership structure
Want advice on buying a property?
Whether you are looking to buy a property on your own or with someone else, Shortland Horne can help you with everything, whether that’s finding the right property to buying at auction and arranging removals.
Get in touch with our friendly team to see how we can help.