What is Joint Ownership?
There are two types of joint ownership of land/property in the UK. They are:-
Which you choose is entirely up to you. Here, we walk you through the basics of the different types of joint ownership, and by understanding the principles of joint ownership of land in the UK, you can hopefully decide whether you want to be tenants in common or joint tenants.
What is a Joint Tenancy?
With a joint tenancy, the owners own the whole of the land together, jointly, and in equal shares. The phrase ‘joint tenancy’ refers to the legal ownership, and the phrase ‘joint tenant’ refers to the owners themselves.
Under a joint tenancy, if one of the joint owners die, their share will pass automatically to the surviving owner(s). This is a legal principle known as the ‘right of survivorship’.
What is the Right of Survivorship?
The right of survivorship applies to joint tenants when one (or more) of them die. When this happens, the deceased owners share passes automatically to the surviving joint tenants. A right of survivorship will override anything else – eg a will that purports to gift the share of the house.
The right of survivorship applies to most cash assets that are owned jointly too – for example bank accounts. In those circumstances, probate is not normally needed as the asset simply passes to the surviving owner the moment the joint owner dies.
What is a Tenancy in Common?
Under a tenancy in common, the owners will hold distinct shares of their own of the property (rather than equal shares of the whole). Tenants in common CAN hold equal shares, but unlike a joint tenancy they can also own in unequal shares.
How do I know if I have a Joint Tenancy or Tenancy in Common?
The ‘title’ to your house held at the Land Registry (HMLR) will show which type of ownership you have. Unfortunately, it is not as simple as there just being a note saying either Joint Tenants or Tenants in Common!
Instead, within a section known as the ‘Proprietorship Register’ the type of joint ownership is defined by either:-
- No restriction – and so it is a joint tenancy; or
- A restriction – meaning it is a tenancy in common
What is a Tenants in Common Restriction?
This is what defines that the joint ownership is a tenancy in common. It is rather wordy and starts with ‘no disposition by a sole proprietor….’. If this ‘restriction’ appears in the Proprietorship Register of the title to your house at HMLR, then you are tenants in common. If there is no such restriction, you are deemed to be joint tenants.
How do I change from Joint Tenants to Tenants in Common?
You change from joint tenants to tenants in common by adding the tenants in common restriction to the Proprietorship Register at HMLR. You can do this yourself, or you may find it better to have the help of a conveyancing solicitor to do it for you. This is known as ‘severing the joint tenancy’.
How do I change from Tenants in Common to Joint Tenants?
You change from tenants in common to joint tenants by removing the tenants in common restriction from the HMLR records.
What are the benefits of owning as Joint Tenants?
The main and obvious benefit of owning as joint tenants is the security of knowing that your share will pass to the joint owner(s) automatically on death, come what may.
What are the benefits of owning as Tenants in Common?
The main benefits of owning as tenants in common are:-
- Unequal shares – you can hold unequal shares
- Gift away – you can pass your share to someone other than the other joint owners (by will)
- Estate planning – you may wish to consider estate planning (eg placing your share in trust)
How do we show percentage shares of a Tenancy in Common?
You should have a suitably worded declaration of joint ownership showing who owns what shares. This should be signed by all owners.
Joint Ownership – do I need a Will?
Yes! We should all have a will come what may. And, even if you own as joint tenants (which pass outside of the terms of your will) you should nevertheless have a valid will in place to deal with things like:-
- Appoint executors
- Appoint guardians (if you have children under 18)
- Make cash legacy gifts
- Residuary estate – specify who gets what of the bulk of your estate
Does a Tenancy in Common save Inheritance Tax?
There is a common myth that owning as tenants in common saves you Inheritance Tax. It does not! All it does is allow you to deal with your share of a property and gift it to whom you chose – unlike a joint tenancy where it passes by survivorship to the remaining joint owners.
If you want to undertake tax planning with your share in a property, you need to do more than simply own as tenants in common!
As a general rule of thumb, utilising the family home for tax planning is something to think very carefully about! The security of the surviving owner knowing that their home is safe, and there’s to do with as they please is something that no amount of tax planning perhaps outweighs?
Joint Ownership FAQs
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