Buying a property with a spouse a friend, family member, or anyone else for that matter? You will need to consider how to hold the investment, as joint tenants or tenants in common.
When buying property together you have the option to register the property as joint tenants or tenants in common. What’s the difference and what do you need to be mindful of?
Joint tenants or tenants in common?
This brief article gives you an overview of the main differences between holding a property as joint tenants or tenants in common. It highlights what you need to think about, but make sure you take independent legal advice before making any decisions.
- Both parties own the whole of the property, not a quantified share.
- Most couples choose this option when they buy a home together for owner occupation.
- If one person passes away, then the right of survivorship applies – the surviving person inherits all of the property on their partner’s death.
- The person who dies is unable to leave their property, or a share of it, to anyone other than their joint tenant.
- When the surviving person then dies, they are free to leave their property to whoever they choose.
- Joint tenancy is the simpler of the two options – it does not require working out exactly how much each partner contributes to the purchase price – it simply splits it equally between them.
- If the relationship ends before one party dies, they might choose to sell the property and split the proceeds 50/50 or party may choose to retain the property and buy the other out of their share.
Tenants in Common
- Tenancy in common is generally used by business partners for investment.
- Owners can split ownership into specific amounts. This means that different investors can contribute different amounts to the purchase price and ownership costs and recognise the split ownership on the title.
- The split can be fixed from the outset (for example, there might be a 25%/75% split of the purchase price) but it can also be altered over time to reflect the contributions they make during the ownership of the property. For example, one of the partners may get a new job and start earning more and as a result, they increase their share of the ownership through increased contributions from, say, a 25%/75% split to 40%/60%, or any other combination.
- The appeal of tenancy in common is that the contributions made by individuals can be reflected in the ownership of the title. Then, if the property is sold or the investors go separate ways, they know what percentage of the property belongs to them.
You can also find more information about Joint Tenants and Tenants in Common on the UK Government website.
Make sure you both give consideration to what is best for you before you buy your property, you need to think about what might happen if one of you no longer wants to own the property, or if you’re a couple and decide to go your separate ways. Whilst these might be uncomfortable conversations, it’s best to plan from the outset. Make sure you take independent legal advice so you make the decision that’s right for you.
We hope you have found this article useful, feel free to comment or ask any questions. For more information on about overseas property investment check out our other articles and request your copy of our UK Buyers Guides from [email protected]
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