It has long been common practice to buy a house with a spouse or long term partner, but as house prices continue to rise and deposits get larger, increasingly friends, siblings or even small groups of people are buying property together.
There are two types of joint ownership of a property. Whether a property is freehold or leasehold you can own the property as either Joint Tenancy or Tenants in Common.
Most married couples and those in civil partnerships and long-term relationships are likely to be joint tenants.
With this agreement the joint owners both own the whole property and do not have a particular share in it.
When one of the owners dies the other automatically becomes the sole owner, neither can transfer their share to another person via a will.
Tenancy in Common
This agreement is practical where
- either co-owner has a child or children from a previous relationship;
- the co-owners are not married couple or in a civil partnership e.g. siblings or friends;
- unequal contributions are made by each co-owner to the mortgage, deposit, purchase price and maintenance;
- one co-owner does not want their share to pass automatically to the surviving co-owner;
- business partners are buying together;
- Co-owners want to reduce potential inheritance tax on an estate.
Each individual owns a definite share of the property. When the property is sold, they will get that proportion of the profit.
When one of the co-owners dies their share of the property can be passed on to whomever they specify in their Will or to their next of kin if they die without leaving a Will.
When buying as Tenants in Common, there should be a precise agreement drawn up which details each party’s share and it is strongly recommended that each party makes a Will.
For further advice on buying a property in joint names contact our specialist team of Property Lawyers.