Tenants in common
Properties owned by up to four people can be owned by ‘tenants in common’ - this is when each co-owner owns a distinct share of the property.
What is tenancy in common?
Properties owned by up to four people can be owned by ‘tenants in common’ - this is when each co-owner owns a distinct share of the property.
This type of ownership is usually used by friends, family or business partners who want to buy together.
As tenants in common, you’ll typically own 50% of the property each but it’s also possible for you to have unequal shares.
If you die, you can leave your individual share of the property to anyone you’ve chosen who’s named as a beneficiary in your will.
Key points
- As tenants in common, you each own a distinct and separate share of the property
- Up to four people can be tenants in common and you don’t need to have equal shares
- You can each leave your individual share of the property to chosen beneficiaries in your will
- It can be a good option for people who want to co-own with someone but want to leave their share to children from a previous relationship
- Having a declaration of trust helps people to know where they stand if the property’s sold or if one person wants to be bought out in the future
Should I buy as tenants in common?
This all depends on your situation, the relationship you have with your co-buyer and your wishes for the future. Owning property as tenants in common might be right for you if:
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You’re a married couple with children from a previous relationship
This way each parent can make sure their own children inherit their share when they die, while the other spouse can continue to live in the property until they pass away
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You have unequal shares
If you’re both putting in different amounts of deposit into a property, buying as tenants in common can help to protect your personal share if you split up or want to go your separate ways in the future
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You’re single and want to get on the property ladder
Buying with others can help you to invest in a property affordably. If any tenant wants to move out they can sell their share to a new tenant, or the remaining tenants can buy them out
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You want to plan for care home fees
Owning as tenants in common can help you avoid having to sell your home if you end up needing long-term care - your partner’s share will be protected and won’t be included in assessments for care home fees
What's the difference between tenancy in common and joint tenancy?
While these types of buying arrangements are similar, there are differences and what will suit your situation will depend on your own circumstances and needs.
Joint tenancy
Buying as a joint tenancy means you own the property equally with whoever you’re buying it with. Both owners will have to agree to selling the property and the proceeds will be split between them equally. If one tenant dies their share will automatically pass to the other owner. It’s the option usually chosen by married couples and people in civil partnerships.
Tenancy in common
If there are up to four of you, you can buy a property as tenants in common, this makes it a popular choice for friends and family who want to buy together. You don’t have to have equal shares in the property, but all joint owners have equal rights to live there. And you can choose to leave your share when you die to anyone you wish by stating this in your will.
Although you may be able to change the way you own your property later on making the right ownership decision from the start will avoid additional costs and difficulties.
What happens if one of the tenants in common dies?
If you own a property as tenants in common and one of you dies, that person’s share won’t automatically go to you or the other joint owners.
Instead, it will be passed on according to the wishes that person set out in their will. If they don’t have a will, their share of the property will be distributed in line with intestacy laws.
This makes owning as tenants in common ideal for people who want to co-own with someone but have children from a previous relationship who they want to inherit their share.
Can I change from tenants in common to joint tenancy?
Yes, you can. This is called a notice of severance, but to do this you’ll need the other joint owners to agree.
You’ll need to fill in a form called a trust deed - you might want to use a legal professional to help you do this. And if you had a trust deed already, you’ll need to update it.
Your property’s title deed may have had a restriction when you applied for a tenancy in common. For example, not allowing you to sell the property unless certain conditions are met. If this is the case, you’ll also need to complete a form to cancel this restriction.
To change from tenants in common to a joint tenancy you’ll need to send both of these forms and any other paperwork required to HM Land Registry. There is no fee for this.
Do I need a declaration of trust?
Although it isn’t required by law, it’s a good idea to have one so that everyone knows what will happen if the property is sold or if someone wants to sell their share in the future.
It’s best to have a declaration of trust drawn up at the same time you complete the purchase of your property.
Also known as a deed of trust, this legal agreement sets out:
- When and how the property can be sold
- How much money each owner has put into the property
- How much each owner is required to pay towards the mortgage
- How much notice each owner has to give if they want to end the arrangement
- Whether one or more of you has first right of refusal to buy the share of the owner that wants to leave
- How the money from the sale should be divided up