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Types of Ownership: Joint Tenants or Tenants in Common
The advantages of purchasing a property with others are well publicised – by pooling resources for the deposit and mortgage payments, it is possible for friends, family or partners to get onto or higher up the property ladder where they would otherwise be unable to. However it is important for decisions to be made as to how the property will be owned legally at the outset. Your solicitor will be able to advise on the available options depending on your situation but it is wise to know what the alternatives are.
Joint tenancy is when two people buy a property together and thereby own the property in equal shares. This will sometimes mean that the deposit, mortgage payments and house-hold bills are split evenly although in many relationships, especially marriages, this is not always the case. Under a joint tenancy, the death of one of the parties would result in ownership automatically passing to the other owner, regardless of terms of a Will. This is called the ‘right of survivorship’.
When 2 or more people are buying a property as tenants in common, they must decide what shares they wish to own at the outset. The share that each tenant owns respectively is often decided by the level of contribution that they have made/are making to the purchase price through deposit or mortgage payments. When the shares are unequal, it is highly recommended to draw up a Deed of Trust, something one of In-Deed’s experienced conveyancing lawyers would be glad to assist with.
There is no ‘right of survivorship’ with properties owned by Tenants in Common which means that in the event of death, the tenant’s share would pass through their will, sometimes requiring the property to be sold for the share to be realised. Tenancy in Common is often used by siblings, friends and couples where there are children from previous relationships (thereby protecting the children’s interests).
When deciding between the two options, there are a range of factors to bear in mind. Is your financial position sufficiently similar so as to split everything equally? How likely is that one of the purchasers will want to sell the property when another doesn’t or fail to meet mortgage payments? In the event of something happening to one of the parties, what would they want to happen to their share? The answers to these and other questions will help determine which type of tenancy you decide upon.
Although the name may suggest otherwise, shared ownership is a different way of owning a property to the two listed above. Instead of owning the property with a friend or relative, under shared ownership the other party is usually a housing association to whom rent is paid (although there are private schemes where the other party is an investor). Often the party paying rent can slowly buy the other share of the property which in the case of government back schemes is often new or refurbished with stamp duty waived. These factors mean that such properties are generally a great way for people to get onto the property ladder.
Our specialist conveyancing solicitors are experienced in dealing with a range of different ownership types and would be delighted to advise if you are unsure about which path to choose. Get an instant conveyancing quote online or give us a call on 0203 434 0603.