Joint property ownership explained

Joint ownership of property is a great way to share the responsibilities and costs of owning a property. However, joint ownership can have legal implications, and it is important to understand the different types of joint ownership, the advantages and disadvantages of each, and how to set up and manage joint ownership of property.

Types of Joint Ownership

In England, joint owners can own property either as ‘joint tenants’ or as ‘tenants in common’.

Tenants in common each own a separate and distinct share in the property, which can be of equal or unequal proportions. Each owner has the right to sell or gift their share of the property to whomever they wish. When one owner dies, their share of the property forms part of their estate and is passed on to their heirs or beneficiaries according to their will (or according to the rules of intestacy if the deceased owner had not made a will).

Joint tenants, on the other hand, hold an equal and undivided share in the property. When one owner dies, their share of the property automatically passes to the surviving owner(s), rather than being passed on to their heirs or beneficiaries. This is known as the right of survivorship and is a key difference between joint tenants and tenants in common.

Advantages of the different types of Joint Ownership

An advantage of owning property as joint tenants is that it can simplify inheritance planning. When an owner dies, the property automatically passes to the surviving owner(s) without the need for a Grant of Probate to be obtained. This can save time and money, as probate can be a lengthy and costly process. Owning property as joint tenants is also a simple way of ensuring that the responsibilities and benefits of property ownership are shared equally between the owners, without having to go to the additional expense of drawing up a more complex agreement.

The advantages of owning property as tenants in common include more flexibility. Each tenant in common can own a different percentage of the property, which can be useful if they have made unequal contributions towards the purchase price or if, for example, one owner intends to pay more towards repairs or renovation works after the purchase has completed. It also gives each owner more control over their own investment in the property. If one tenant in common dies, their share of the property will pass to their heirs of beneficiaries, rather than to the other tenant(s) in common. This can be particularly useful if, for example, the owners have children from a previous relationship, and so may want to include specific instructions in their will about their share in the property, rather than having their share automatically pass to the other owner(s) upon their death. If the property is sold, then each tenant in common is entitled to receive their share of the sale proceeds based on their percentage of ownership.

How to set up the different types of joint ownership

When purchasing a property, owners must specify whether they wish to hold the property as joint tenants or as tenants in common. If you wish to hold the property as joint tenants, then this is easily achieved by ticking a box on the Transfer document that you will sign when purchasing the property.

Alternatively, to set up ownership as tenants in common, you can either confirm the shares to be held by each owner in the Transfer document itself, or you can ask your solicitor to prepare a Declaration of Trust. This is a more detailed document which allows the owners to set out how the shares in the property will be held, and what will happen on any sale of the property or the death of one of the owners. It can also be used to record any agreement about each owner’s responsibilities for the ongoing maintenance of the property, payment of bills, and responsibility for mortgage payments.

The way you jointly own a property can also be changed at a later date if your circumstances change. It is important to be aware that if you own the property as joint tenants, one of the owners can decide at any time to change the ownership to tenants in common, and this can be done without the agreement of the other owner(s). Your solicitor can assist you if you want to consider changing the way you jointly own the property.

To conclude…

Joint ownership of property in England can be a flexible and cost-effective way of owning a property, but it is important to understand the legal implications and potential pitfalls. You should also take any necessary independent tax advice before deciding which option is best for you. By choosing the right type of joint ownership to suit your individual circumstances, owners can enjoy the benefits of joint ownership while minimizing the risks.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.