Buying a property alone is not always the right option for you, based on your finances or your lifestyle. Instead, you may benefit from buying with other people. Doing so may allow you to borrow more for a mortgage and help to share the load on repayments and other bills.
How many people can own a property?
Up to 4 people can legally own a property in the UK, but make sure you’re buying with people you trust, as it is a big investment with a lot of responsibility.
If you want to own a house or flat with someone else, be it a partner, friends, or family members, Joint Tenancy is one of your options for joint ownership.
What is Joint Tenancy?
With Joint Tenancy, all the buyers will own 100% of the property and are known as joint tenants. This means you will all act as one entity owning the property, rather than it being divided up amongst you. All your names will be on the title deed.
Joint owners with a survivorship clause
This type of ownership has a different name in Scotland: joint owners with a survivorship clause.
A survivorship clause means that if one of the tenants were to pass away the other tenants will automatically inherit the other person’s share of the property.
If there are two tenants and one dies, the surviving tenant will become a sole owner of the property.
Who is Joint Tenancy suitable for?
As this kind of ownership views all owners as one unit, it is generally favoured by married or unmarried couples. This will be best for them as they are committed to being such a team in their lives and will intend to live together long term.
However, there are no rules for what kind of ownership you use. If you would like to live long term with friends or family and don’t want to divide up ownership of the property you are within your rights to use Joint Tenancy.
What kind of mortgage do you need?
Joint Tenancy requires you to take out a
Joint Mortgage. With a joint mortgage you will all be responsible for paying towards the deposit and the repayments.
Up to 4 people can apply for a joint mortgage. When deciding how much to lend, mortgage lenders will usually look at the income of the 2 highest earning people applying.
The financial history of each person in the joint mortgage will affect everyone else in the mortgage, including each other’s credit scores. So, it is important that you do the
necessary checks before applying for the mortgage. If one of you falls into financial trouble and cannot make the repayments the rest of you will have to make up the loss.
How does Joint Tenancy affect selling and wills?
As you will each own 100% the property, you cannot sell unless all owners are in agreement.
If you would like to move out or sell you will have to discuss with the other owners, but they cannot be forced to agree. The only way you can sell or get someone to leave the property without agreeing is if your circumstances allowed you to get a court order.
Additionally, extra loans cannot be taken out on the property without all owner’s agreement.
If one of you were to die, their stake in the house would automatically go to the other owner or owners. If there were 2 owners, then the living owner would then be the sole owner of the property. This rule means you cannot leave a portion of the property to anybody else in your will.
Can you change to a different kind of ownership?
If you later decide that you would rather own separate shares of the property rather than the joint 100% ownership, it is possible to change your ownership to
Tenancy in Common.
To do this you will need to get an
SEV form to sever your Joint Tenancy. We recommend you get a legal professional to help you fill in this form and gather any necessary supporting documents.
You will then need to send these off to HM Land Registry. Once again, you will need to have the full agreement of all owners to carry out this change.
Severing Joint Tenancy in Scotland
If you are in Scotland, the process is slightly different. You will need to get a solicitor to help you change the title deeds on the property.
What is the difference between Joint Tenancy and Tenancy in Common?
With a joint tenancy, all parties own the whole of the property whereas tenancy in common recognises if one party has paid more for the property and can reflect the contributions made by each party.
Tenancy in Common can be useful if each party decides to go their separate ways as they will get back the percentage of the property they have contributed.
The pros and cons of Joint Tenancy
It’s important to do your research to make sure Joint Tenancy is right for you. There are both benefits and downsides to consider.
Benefits include:
- In a joint tenancy with the right of survivorship, property automatically goes to the other tenant(s) in the case a tenant passes away so there is no need to go through probate court.
- All financial responsibilities are shared with the other tenants so this can make owning a home more affordable as costs are split.
- You get equal share of any income from the property such as rent.
Some downsides to be aware of are:
- Both owners must agree to sell the property. This can cause problems in the case of a relationship breakdown.
- Joint Tenancy does not recognise if one person has contributed more when purchasing the property so if the property is sold both tenants will get half each.
- You cannot leave your share of ownership to someone else. This will automatically go to the other tenant.
Joint Tenancy FAQs
What happens to a jointly owned house when someone dies?
In the case that a tenant dies in a Joint Tenancy, the property will automatically go to the other owners.
Do joint tenants have to pay inheritance tax?
Yes, if the assets received from the deceased are over the threshold (£325,000) then the remaining tenant will have to pay inheritance tax on the amount inherited over this threshold.
Updated May 2024