Exploring Joint Ownership: Joint tenant v’s Tenants in common

If you buy, purchase, or inherit property with another individual, you must decide how you want to ‘hold’ the property together. Under UK law you can become a joint owner as either ‘joint tenants’ or ‘tenants in common’.

The type of ownership you choose affects what you can do with the property if your relationship with a joint owner breaks down, or if one owner dies. Your property conveyancer will discuss these options with you and include your choice when they register the property HMRC.

Joint tenants:

  • Automatic Transfer: In the event of one owner’s demise, the property automatically transfers to the surviving owner(s).
  • Equal Rights: Both owners share equal rights to the entire property, eliminating the concept of individual shares.
  • Inheritance Limitation: It’s important to note that you cannot bequeath your ownership of the property in your will.
  • Selling Complexity: Selling the property without unanimous agreement from all joint tenants can prove challenging.

It is much more difficult to sell the property without the agreement of all joint tenants.

Tenants in common:

  • Specified Shares: Each co-owner holds a specified share in the property, which may not necessarily be equal. Specific information on these shares may not always be available from HMRC.
  • No Automatic Transfer: Unlike joint tenancy, the property does not automatically transfer to the surviving owner(s) upon death.
  • Testamentary Freedom: You can pass on your share of the property in your will, offering more flexibility in estate planning.

A form 17 election cannot be made (i.e. the property income cannot be split other than in equal shares) if the couple own the property as ‘joint tenants’. If one partner is a basic rate taxpayer and the other is not, it may be worth checking your tenancy agreement to see if you can avoid the adverse effects of section 24!

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