brown wooden house miniature on brown soil

When purchasing a property with another (or others) in England & Wales, you must decide how to legally hold ownership. The two options are joint tenancy and tenancy in common. While both allow for shared ownership, they have significant legal and financial differences. Understanding these distinctions is crucial for making an informed decision that aligns with your long-term goals.

What is Joint Tenancy?

Joint tenancy is a popular form of property ownership, particularly among married couples or partners. Key features include:

  • Equal Ownership: Each owner (or tenant) has an equal share of the property, regardless of financial contribution.
  • Right of Survivorship: If one owner dies, their share automatically transfers to the surviving owner(s), regardless of what a Will states.
  • Unified Decision-Making: Major property-related decisions, such as selling or refinancing, require the consent of all joint tenants.
  • Simplified Property Management: There is no need to track individual contributions since ownership is automatically equal.

What is Tenancy in Common?

Tenancy in common provides more flexibility in ownership structure and is often preferred when co-owners contribute different amounts to the purchase. Key features include:

  • Unequal Ownership Shares: Unlike joint tenancy, tenants in common can own different percentages of the property, reflecting their financial contributions.
  • No Right of Survivorship: If one owner dies, their share does not automatically transfer to the other owners. Instead, it forms part of their estate and is distributed according to their will or inheritance laws (rules of intestacy).
  • Independent Selling or Transferring of Shares: A tenant in common can sell or transfer their share without the consent of the other owners.
  • Flexibility in Estate Planning: This form of ownership allows for greater control over inheritance, making it a preferred choice for those with children from previous relationships or estate planning needs.

Key Differences Between Joint Tenancy and Tenancy in Common

FeatureJoint TenancyTenancy in Common
Ownership StructureEqual shares for all co-ownersShares can be unequal
Right of SurvivorshipYes – ownership automatically transfers to surviving owner(s)No – the deceased owner’s share is passed according to their will or intestacy laws
Selling or Transferring SharesRequires agreement from all ownersIndividual shares can be sold or transferred without consent from others
Estate PlanningProperty passes automatically to surviving owner(s), bypassing a willOwners can leave their share to whomever they choose in a will
Decision-MakingAll owners must agree on key decisionsOwners can act independently regarding their share

Choosing the Right Ownership Type

The decision between joint tenancy and tenancy in common depends on your personal circumstances and future plans. Consider the following:

  • Are you purchasing with a spouse or partner? Joint tenancy may be the best option, ensuring automatic inheritance and equal ownership.
  • Are you contributing different amounts? Tenancy in common allows for proportional ownership that reflects individual contributions.
  • Do you want control over who inherits your share? Tenancy in common enables estate planning flexibility, preventing automatic transfer to co-owners.
  • Do you anticipate potential changes in ownership? Tenancy in common offers greater flexibility in selling or transferring shares.

Changing Ownership Type

If circumstances change, you can sever a joint tenancy to convert it into a tenancy in common. This process, known as severance, can be done without the other owner’s consent by completing a ‘Form A Restriction’ and notifying the Land Registry.

Final Thoughts

Both joint tenancy and tenancy in common have their advantages and drawbacks. Joint tenancy simplifies ownership and guarantees automatic inheritance, whereas tenancy in common offers greater financial flexibility and estate planning options. Before deciding, seeking legal advice can ensure that your choice aligns with your personal, financial, and estate planning goals.

If you’re purchasing a property with someone else or considering changing your ownership type, consulting a solicitor can help protect your interests and avoid future disputes.