When deciding to buy a house with a partner or friend, whilst location and price are considerations, how the house is owned is key from a succession and planning perspective. Where property is owned by more than one person a decision needs to be made as to whether it is owned as "tenants in common" or "joint tenants". The difference between these two types of ownership is crucial to the devolution of that property on your death and can also have a bearing on the division of proceeds on a sale during your lifetime.
Joint tenancy means that you and the co-owner own the property jointly; there are no defined shares and on the death of one of you the 'rule of survivorship' applies and the property automatically passes to the survivor. For some this may be ideal, as the survivor is automatically entitled to the property: there is no need to wait for a Grant of Probate or change the title documents. However it does mean the property cannot pass under your Will or be left to anyone other than the surviving joint tenant.
Where a property is owned as tenants in common each party owns a distinct share in the property. Tenants in common can prepare a declaration of trust recording what each party contributed and the amount each party would receive on a sale of the property. If you own a share of property as tenants in common, your share can be left under your Will to whoever you wish. Tenancies in common are therefore particularly important for those buying with friends, or in situations where a parent is assisting a child to purchase a property, as they provide greater flexibility and control for the parties concerned. Having a clear declaration of trust will also help avoid potential disputes when the property is sold, or a relationship breaks down, and the proceeds of sale need dividing up.
It may just be one small box to tick on the Land Registry form, but the choice of holding as joint tenants or tenants in common is an important one and worth making sure you have got right.
This article was first published in the Your Professional Forum ("YPF") blog (www.ypforum.co.uk) on 17 March 2014
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
