Joint tenants or tenants in common?

Joint tenants or tenants in common?

There’s plenty to think about when it comes to getting a place with your best mate or partner for the first time. Does your friend forget to put the toothpaste cap back on? Or will there be room for the 30 pairs of trainers your boyfriend insists are all very special and different? There’s enough to worry about without considering whether to co-own as joint tenants or tenants in common.

If you’re here, then maybe you’re not sure what either option really means or maybe you’re confused about what’s best for your situation. Lucky for you, that’s where we come in! We’re putting them head to head joint tenants v tenants in common.  

Let’s get into it:

Tenants in common vs joint tenants UK

First up, the basics: When 2 or more people co-own a home, either as a joint tenancy or a tenancy in common, they each own a share of that property. Bear in mind, that’s the whole property — one of you can’t claim the kitchen and another the garden shed. You both own a percentage of your home in its entirety. But what’s the difference between joint tenants and tenants in common? To answer that, let’s look at both options individually…

Joint tenant meaning

Joint tenants, or beneficial joint tenants as they’re sometimes called, have an equal partnership — ie. you both get the same share of the property. It’s the most common option for married couples or those in long-term partnerships. For example, if a property has 2 homeowners, it’s a 50/50 split down the middle and you would both own half. You’re also legally required to act together as a single owner, and if you intend to borrow money to buy a property, you’ll need to get one joint mortgage.

If the idea of a mortgage brings you out in a sweat, check out our: ‘First time buyer mortgage guide’.

Another thing to note about joint tenancies is that you will both need to agree if you ever want to sell the property. Your share of ownership will also automatically transfer to the other owner/s if you die and as a result, you can’t leave it to someone else in your will — not too cheery to think about perhaps, but it’s good to be in the know.

Tenancy in common meaning

Quite a few differences here! With a tenancy in common, you each own different shares of the property. For example, one tenant might own 70% while two others own 15% each. Shares in the property can also be obtained at different times, so a new tenant could be added to a tenancy in common agreement years after the others. Tenancy in common is usually the option chosen by friends or family who’re buying together. It’s not impossible to get separate mortgages for a tenancy in common, but you might have to apply for a joint mortgage if you can’t find a willing lender.

With this kind of agreement, the property doesn’t automatically transfer to the other owner/s if you die, plus, it’s possible to pass on your share to someone else in your will — time to pick out a lucky friend or family member.

Which is better? Joint tenants or tenants in common?

So now we’ve covered joint tenants vs tenants in common, which is the better option? To be completely honest, it depends on what’s going to be the best option for you. So here are a couple of points to keep in mind…

  • If you’re married or starting a family, it might make sense to buy as joint tenants so full ownership will transfer to your partner if you die. This also means if there are children involved, it’ll be easy to keep everyone together in the family home when it matters the most.  
  • If you’re paying unequal amounts for the property, then a tenant in common arrangement is a way to formally recognise that with different shares.
  • If you’re buying with friends or family, a tenant in common arrangement might afford you more flexibility — for example, different shares can be divided up depending on what everyone can afford.
  • Whether you choose joint tenants or tenants in common, if you need to take out a joint mortgage then you must trust your co-owner/s. You will be equally responsible for making the mortgage repayments and if someone lets you down, you’ll have to cover the shortfall. In some situations, it could also hurt your credit score.

Change from tenants in common to joint tenants

Regardless of what kind of homeownership you agree to, it is possible to switch later down the line if your situation changes. This shouldn’t be taken lightly, there are quite a few hoops to jump through, but it can be done.

To change from tenants in common to joint tenants, you’ll need to be in agreement with all homeowners. You’ll then need a conveyancer to help you prepare the necessary documents — for the full list, visit GOV.UK.

In truth, it’s not as easy to change from joint tenants to tenants in common. If you’d like to do this, you’ll need to apply for a severance of joint tenancy first using a Form A Restriction or SEV. You can do this without the other owner’s permission and it might be a good idea to hire a conveyancer or solicitor to help with your application. You’d then reapply for a tenancy in common. For more information, visit GOV.UK.    

A few final tips…

No matter what choice you make about how to co-own, moving into a new place with someone you trust is a very exciting thing. So try not to stress about the small stuff that crops up along the way — a toilet seat left up now and then or a towel on the bathroom floor. It’s an adjustment, but you’ll get there!

If you’re still on the lookout for a new place, why not read up on: ‘The best places to buy in London for first time buyers’.

Already settled? Check out: ‘9 ways to protect your new home’.

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.