Joint Ownership: Your Guide

What is joint ownership?

Joint ownership is exactly what it sounds like, and it will apply when two or more people become the legal owners of a property.

There are two main types of joint ownership: tenancy in common and joint tenancy. This means that when you buy a property with your partner or a friend, you’ll need to decide whether to own it as tenants in common or joint tenants.

Each of these arrangements will have different consequences in the event of a house sale, the death of an owner or a relationship ending. So it’s important to work out which form of ownership is best for you before buying a property.

Tenants in common

Tenancy in common agreements are often used when purchasing buy to let homes, or when buying a property with friends or relatives. As tenants in common, you’ll each own a specific share of the property – this will usually be 50% but it can vary depending on your circumstances.

For instance, if you co-own a property with two of your children, you may decide to purchase a 50% share while your children have 25% each.

When you own a property as tenants in common, you’ll also have control over how your share is distributed after you pass away. This might seem morbid to think about, but it can be reassuring to know that your loved ones will benefit from your share when you’re gone.

Additionally, if you find yourself needing full-time care in the future, a tenancy in common agreement could help you save on care home fees. This is because you will be means-tested against your share, rather than the whole property.

No matter what your reasons are for entering a tenancy in common agreement, we would always suggest keeping a record of your contribution. An experienced conveyancing solicitor can help you write up what’s known as a deed of trust, so you can protect your investment.

Joint tenants

Joint tenancies tend to be a more popular option for couples who are purchasing a property together. This is largely because both individuals will own the entire property, without any specific shares set out.

If you and your partner or spouse plan to leave property to each other when you die, a joint tenancy agreement could be the best choice as right of survivorship will be applied. This means that your significant other will automatically be entitled to the home you share.

But if you have children from a previous relationship, this could mean that they miss out on inheriting from the property.

If you’re already in a joint tenancy and you’d like to end it, it is possible to change your agreement to a tenancy in common.

How to sever a joint tenancy

When you end a joint tenancy, it’s known as ‘severing’ the agreement. This will usually apply when there is a change in your relationship with the co-owner of the property.

To sever a joint tenancy, you or a legal professional will need to apply for a ‘Form A restriction’. You can make this change with or without your co-owners’ agreement. But if they do not agree, you will need to send them a written notice of severance – a conveyancing solicitor can help with this.

Your form and any supporting documents – such as the notice of severance – should be sent to HM Land Registry’s Citizen Centre. There is no fee charged for this.

Can I sell my half of a jointly owned home?

With both forms of joint ownership, you will need all owners’ agreement to the sale of your property. This means it isn’t possible to sell without the knowledge of a co-owner.

Selling as joint tenants means you will both receive 50% of the proceeds. This will apply even if you contributed more financially.

Meanwhile, when you sell as tenants in common, you can receive different shares of the proceeds based on what is set out in your deed of trust.

Applying for a joint mortgage

When you want to buy a house with someone else, you’ll need to take out a joint mortgage. Some lenders will allow up to four borrowers, but it’s more common for two people to take out a home loan.

Combining finances means you will usually be able to borrow more money, as well as put down a bigger deposit. This higher deposit could mean that you are able to secure a lower interest rate on your mortgage.

But it’s also vital to remember that taking out a joint mortgage links your finances to the other homeowners. This could affect your credit rating if one borrower faces financial problems.

You’ll also have to ensure that you can cover the whole monthly repayment figure in the event your co-owner can’t come up with their share.

For help with the legal side of buying a house as a joint owner, trust First4Lawyers. We work with conveyancing experts who will make the process as straightforward as possible. Just give us a call or get a free conveyancing quote with First4Lawyers.