Joint Tenants vs Tenants in Common: Pros and Cons

Caragh Bailey
21/04/2021
7,598
7 min read
Joint Tenants vs Tenants in Common from Parachute Law

The choice of joint tenants or tenants in common is far more important than it might seem at first glance. In fact, this decision effects your rights over rental income and your shares of the sale profits, if or when you sell the property.

If you need to change from joint tenants to tenants in common, we can help, with a severance of joint tenancy.

What is the difference between joint tenants and tenants in common?

While tenants in common generally provides more freedom and security, there are some disadvantages of tenants in common, compare your options in the table below.

Joint Tenants
(also known as beneficial joint tenants)
Tenants in Common
  • You both have equal rights to the whole property
  • Full beneficial ownership goes to the other owner if one of the joint tenants dies. You cannot leave your ownership of the property to anyone else in your will.
  • If you survive your partner, you inherit full ownership, which you can bequeath as you choose.
  • You can divide the beneficial interest unequally (for example 50/50 or 99/1)
  • Your share can be left to whoever you choose after your death

Joint tenancy vs tenants in common: Pros and Cons


Joint Tenants
Tenants in Common
What happens when you die?
  • Your share of the property goes to the other joint tenant, by right of survivorship. The surviving partner doesn't need to worry about the security of their claim on their home.
  • If your home is your only asset, you may not need to draft a will at all, as your spouse will own it automatically (or vice versa).
  • Your share of your property goes to your estate on your death
  • You can own an unequal share in the property. If you own a larger share in the property, this is the share that will be received by your estate
  • You cannot leave any share of your ownership to anyone else.
  • The beneficiaries of your estate may be able to force your spouse out of your home
  • You will need to draft a final will and testament
This can be problematic where one party wants to leave some of their share in the property to their children from a previous marriage. In this case you would need to execute a severance of joint tenancy.

This can cause a dispute between your partner and the beneficiaries of your will. To avoid this, you may consider adding a clause to your will which gives your partner the right to live in your property until their death (should they survive you) before the beneficiaries of your will can claim their inheritance of your share in the property. If you are married, you will also need either a post nuptial agreement from your spouse, otherwise they could fight your kids to keep the whole property.

What happens if you break up?
  • If you separate you each get half.
  • You own your own share of the property. (It is advisable that you execute a deed of trust to confirm your share).
  • Within the deed of trust you can include an agreement about what will happen if either owner wants to sell
  • It is much easier for you to force a sale, if your deed of trust contains an exit clause
  • You cannot use a deed of trust to separate your shares in the property, this means:
  • If you've invested more in the property you still only get half
  • It can be very difficult to force your partner to sell, if you want to get your money out
  • You will need to pay a solicitor for a deed of trust
  • If you are married, you will need to file a Form 17 to declare your shares on any rental income from the property to HMRC
This might be a good idea where you have children together. You can still get half each even if one party has made more of a financial investment and the other has been a full time parent. It also means that one party cannot force the other party to sell the family home, which may provide more stability for the children.

This option offers more protection to couples who want to avoid a messy break-up

Is this an investment property?
  • Equal share in any income from the property
  • Save the cost of deeds and registering restrictions
  • No need to file a Form 17
  • You can own an unequal share of the beneficial interest
  • This may be more tax efficient
  • This may be fairer if you've invested unequal amounts in the deposit or mortgage repayments
  • Can't divide beneficial ownership unequally
  • This may be less tax efficient, if one partner actually invested less but is in a higher tax bracket or has more taxable earnings
  • You'll need to pay a solicitor for a deed of trust
  • If you're married, you'll have to file a Form 17, this will have to be resubmitted any time your beneficial interest split changes
Parachute Law Ltd does not provide stamp duty, bankruptcy, financial, tax (including capital gains tax, inheritance tax or rental income tax) advice and does not advise you as to the suitability of any tenancy arrangement for your particular circumstances. We can introduce you to a professional accountant if you would like tax and financial advice specific to your situation and assets.


So, is tenants in common a good idea?

When comparing joint tenants vs tenants in common, you will need to consider whether you share everything equally or unequally. If you want to share everything equally (ownership, income, tax responsibility, expenses etc) then joint tenancy might be fine.

If you would like to share things unequally; if you want to ensure that if you break up, you can make a relatively clean and painless exit; if you want to leave your share to other beneficiaries after your death; or, if you want to protect your share of the value in your home from being swallowed up by your partners care home fees in later life, then registering as tenants in common is a good idea.

You will need:
  • To sever joint tenancy
  • To register as tenants in common
  • To put a deed of trust in place
  • To draft a will

  • And, if married:
  • To file HMRC form 17 for any unequal beneficial interest split

  • And, if leaving your share of the property to another beneficiary:
  • To sign a Post-Nuptial agreement

If you are buying or registering as tenants in common you are advised to get a deed of trust
Here are three types of deeds for different circumstances.

  • Basic Deed of Trust - For long term couples or family members looking to declare their beneficial interest shares and confirm their exit strategy if a party wants to sell.
  • Buy to Let Deed of Trust - For joint owners who wish to share property ownership and income unequally, in a tax efficient way.
  • Floating Deed of Trust - For unmarried couples and friends who want their individual investments toward mortage repayments, works and developments to be reflected in their share of beneficial ownership.

We have on hand counsel to support your deed and offer guidance along the way. Get in contact to become tenants in common, or to get a deed of trust.

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Frequently Asked Questions
You may find this article for married couples and civil partners helpful: form 17

Parachute Law Ltd does not provide stamp duty, bankruptcy, financial, tax (including capital gains tax, inheritance tax or rental income tax) advice and does not advise you as to the suitability of any tenancy arrangement for your particular circumstances. We can introduce you to a professional accountant if you would like tax and financial advice specific to your situation and assets.
If one joint tenant is in a care home and the remaining owner dies, the full value of the property lies in the hands of the surviving spouse in the care home. In order for the deceased parties share to pass on to the benefactors of their will, they would need to have executed a severance of joint tenancy prior to their death, and registered as tenants in common instead.

To protect the property against care home fees in the future, consider a severance of joint tenancy now.
 
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