Joint vs tenants in common

What's the difference between joint tenants and tenants in common?

Joint tenancy and tenancy in common are two different ways to jointly own property.

Put simply, joint tenants own the entire property between them, while tenants in common own distinct shares. This will determine how the funds from the property are divided if you later sell it.

The terms joint tenants and tenants in common can be confusing, especially if you are a first time buyer looking to secure a mortgage.

In both cases, you’ll usually have a joint mortgage and the mortgage lender will view you as "jointly and severally liable" for repaying the mortgage.

This means both of you are equally responsible for repaying the entire debt, regardless of who is actually making payments. If one person stops making payments, the lender can pursue the other(s) for the full outstanding amount.

Joint tenants

If you buy a property with someone else as joint tenants, it means that you will act as a single entity.

It doesn’t matter if one person puts in most of the money for a deposit and the other contributes a smaller figure. You and the other person/people taking out the mortgage will be seen as equal owners of the property.

If one person wants to sell your property, you have to both agree to any sale. If one of the tenants dies, then their share of the property automatically goes to the other joint tenant.

Tenants in common

If you opt for tenants in common, then you and the other person (or people) you are buying with will own defined shares in the property.

These will usually reflect how much money you are putting into the purchase as a deposit or share of the monthly mortgage payment. This could be a 70/30 split for example.

In this case, if a tenant dies the share can be passed onto someone other than the other tenants.

What are the risks of joint tenants?

The main risk of joint tenants is that if you split up, you’ll normally get half the property each rather than a share in proportion to your financial contribution.

A joint tenancy is ideal if you are buying as a couple, and can be taken out whether you’re married or not.

It’s also a good option for family members who are looking to make a shared investment.

However, that does not necessarily mean you will get half each if you divorce. Although the starting point for divorce finances is a 50/50 split, a court can order a different split of assets in the interests of fairness.

Joint tenants can get even more tricky if you own the property with more than two people and one person wants to move out and sell their share, You will either have to all agree to a sale or find an alternative approach.

What are the benefits of joint tenants?

A joint tenancy is a great way to keep things simple when buying a property with a partner. Benefits include:

• Right of survivorship: This means that if one of you dies, the other person automatically owns the whole property, without the need for probate. This cuts down on any unnecessary financial issues at a difficult time

• Equal ownership: Joint tenants keeps things nice and simple. If two of you take out a joint tenancy, you both own the whole property jointly

• Easier sale. When it comes to selling a property, a joint tenancy is ideal, as everyone must agree to the sale, cutting down on any potential disputes. It’s a less complicated process, too

Can you have more than two 'joint' tenants?

Yes. You can have up to four joint tenants (the same is true for tenants in common too).

If more people want to come in on the purchase, then it can be done so via a trust, with the other owners named as beneficiaries whenever a sale is made.

In all likelihood, though, you’ll usually take out a joint tenancy mortgage with one other person.

What scenarios would you opt for a tenants-in-common ownership?

A tenants-in-common mortgage can be a good alternative to a joint tenancy in numerous scenarios, such as:

• You and your partner are contributing differing deposit amounts and want this reflected in case you later split up and sell the property

• You want to maintain your financial independence from your partner

• You are buying with your partner but have children from a previous relationship you want to inherit your share of the property

• You buy with friends and plan to sell the property at some point in the future

• You’re buying a property with your children as a way to help them onto the ladder, but want to keep your investment safe

• You buy a buy-to-let property with someone else as an investment

What are the benefits of tenants in common?

The main benefit of tenants-in-common is that you can have a deed of trust or declaration of trust detailing who owns what share of the property. This will need to be drawn up by a solicitor.

The benefits of this arrangement are:

• Protecting your money. If you put in a bigger deposit than the other person, you can have this reflected in the ownership shares

• Financial independence. Each person can sell their share without having to get consent from the other owners

• Inheritance. Each party can choose to leave their share to whoever they wish

• Flexibility: Shares can be split depending on each owner’s circumstances, so those earning less can make a smaller contribution and pay less each month

What are the disadvantages of tenants-in-common?

• Greater chance of conflict. Because each share is owned individually, it can lead to disagreements when one decides to sell as they don’t need to consult the others

• Unequal responsibility. If one tenant owns more of the property, they may find themselves paying most of the mortgage and covering a higher share of any repair costs

• Challenging sales. If one tenant refuses to sell and keep their share, it may be harder for those who want to move on to find a buyer for their share

What happens if one 'tenant' dies?

With joint tenants, when one person dies their share automatically passes to the other joint tenant. With tenants in common, each owner can bequeath their share to whoever they choose.

This has the potential to lead to conflict if the other tenants are not happy about the person who’s inheriting that share. This is something which should be discussed fully before taking out the mortgage together.

Changing ownership type

You can change from being either:

• Joint tenants to tenants in common. For example, if you get a divorce or separate and want to leave your share of the property to someone else

• Tenants in common to joint tenants. For example, if you get married and want to have equal rights to the whole property

• Sole ownership to tenants in common or joint tenants. For example, if you want to add your partner as joint owner

Other useful guides

Pros and cons of mortgages

How to get a mortgage in principle

Mortgage eligibility explained

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