If you do, you might want to think about whether your ownership is structured to your advantage. If it isn’t, it’s usually a simple matter to sort out (and doesn’t cost much to do), and once you know the facts you can make a decision.

There is plenty of information available on the internet about this subject, so by all means look at that, but it can be confusing and you need to make sure that what you’re reading relates to UK law. Some websites deal with property rights in the USA. These should be ignored because they are totally irrelevant to UK law. More specifically, UK law is different depending where your property is (England, Wales, Scotland or Northern Ireland).

Property law is the same in England and Wales. It’s different in Scotland, and Northern Ireland. This article relates only to England and Wales.

To avoid any confusion, when we talk about owning property we mean owning it with a mortgage as well as owning it outright. This article is about owning property with somebody else, known as joint ownership. If it’s only your name on the deeds, you don’t need to read any further. In England & Wales, there are two methods of joint ownership. They are the Joint Tenancy and the Tenancy in Common.

Now, let’s clear up one thing before we start – this type of tenancy has nothing to do with renting a house or flat and paying rent to a landlord. We are talking about a different type of tenancy here, and this relates to how you own, or hold, your property.

If you have a Joint Tenancy, you are one of two, or more, joint owners. Legally, it’s quite complicated, involving the law of trusts, but let’s try and keep things simple. A Joint Tenant owns the property jointly with the other Joint Tenant, but here’s the thing – each Joint Tenant has an interest in the whole of the property, and importantly has a right of survivorship.

Let’s deal with that last thing first. What it means is that if one of two Joint Tenants dies, the survivor gets the whole of the property. This happens automatically, by operation of law, and it doesn’t matter if the parties are married to each other, or in a Civil Partnership, or related in any way. Survivorship applies even if the parties are not legally related, for example a co-

habiting couple. All that’s needed for survivorship to operate is for two or more persons to

own property as Joint Tenants.

This next bit is important. Survivorship applies, whether the parties have Wills or not. To illustrate the point, if you’re a Joint Tenant, your share of your property will go to the surviving Joint Tenant(s), even if you have made a Will leaving everything to someone else. This is because of survivorship, which applies because you are a Joint Tenant. In many cases this is exactly what people want, and it’s not a problem.

Sometimes though, survivorship can lead to unforeseen consequences and conflict. Take as an example the case of an elderly couple, both widowed, who decide to buy a house together (this is based on a real case). They don’t want to marry again. Let’s call them A and B. They put both their names on the deeds as Joint Tenants. Each of them has grown-up children. Then A is tragically killed in an accident. What happens to the house?

They were Joint Tenants, so survivorship applies and B, who is the only surviving Joint Tenant, gets the house by operation of law. A’s children (who are A’s next-of-kin because A and B were not married to each other) are not very happy because they think they should have inherited A’s share of the house, but because of the Joint Tenancy, they get nothing from it. As next-of-kin, A’s children inherit A’s personal possessions, car, cash and so on, but the house comprised most of A’s estate, so understandably the children are unhappy.

Now, A and B may have intended this to happen. They may have taken a conscious decision to be Joint Tenants. If so, they should have explained this to their children, and dealt with any objections and family conflict face-to-face. On the other hand, if they hadn’t considered the consequences, they were merely storing up trouble for the future, as obviously this came as a nasty surprise to A’s children.

What alternatives were available? Well, the other method of joint ownership in England and Wales is a Tenancy in Common. In this case, the parties are still joint owners, but they each own a separate, defined share of the property. This can be 50%, but it can be anything the parties want. Say a couple buys a flat costing £100,000. One of them pays a deposit of £7,000 and the other pays £3,000. They get a mortgage for £90,000. They decide they will own it as Tenants in Common on a 70% / 30% basis. They don’t have to do this. They can hold it 50 / 50 if they want to. The point is, it’s up to them.

With a Tenancy in Common, there is no rule of survivorship, so if one party dies, their share in the property passes in accordance with their Will, or if they haven’t made a Will, under the Intestacy Rules.

Sometimes, Joint Tenants decide that it would be better to own their property as Tenants in Common. It’s a simple matter to achieve this, by signing a document called a Notice of Severance of Joint Tenancy. This is then registered with the Land Registry using a standard form available online. Currently there is no Land Registry fee payable for this.

Why be a Tenant in Common? Well, co-habitees may want to be, so that their next-of-kin inherits their share of the property. Couples who want their contributions to the purchase of a property clearly reflected should be Tenants in Common (see our 70 / 30 example). Couples who split up will want to be Tenants in Common to stop their estranged partner inheriting their share of the property. The same applies to divorcing couples who are Joint Tenants. There are all sorts of reasons, not all to do with conflict. Sometimes it’s better to be Tenants in Common for Inheritance Tax reasons. Just for information, if one Joint Tenant goes bankrupt, the Joint Tenancy is severed automatically, and the property owners don’t have a say in it.

Just in case you’re wondering, it is possible to change from a Tenancy in Common to a Joint Tenancy. This doesn’t happen that often and it’s more expensive and complicated than severing a Joint Tenancy, because it involves more legal work.

The thing to be aware of is, joint ownership has consequences and you should think about your situation carefully. There’s no right or wrong way to do it, just what suits your circumstances. Take advice if you’re unsure what’s best for you. We have many years’ experience in this area so please get in touch if you’d like to ask anything. We’d be happy to help.

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