If you’re buying a property with someone else, whether it’s a spouse, friend or business partner, you should make sure you choose the form of joint ownership that best suits your needs.
It is common for people to buy property with another person. It allows you to combine incomes, meaning you can consider a higher-value property and share the financial burden.
Generally, joint ownership agreements will be between just two people, although it is possible for up to four to share ownership – regardless of whether they are related.
Under all forms of joint ownership, each person is the legal owner of the property. As a joint homeowner, you have the following rights:
- additional loans cannot be taken out on the property without your knowledge and agreement
- all owners are registered with HM Land Registry
- the property can’t be sold without your permission
- you can’t be forced to leave the property.
There are cases where joint owners can be forced to leave or sell their property with a court order.
There are two types of joint ownership – join tenancy and tenancy in common. Each has important legal ramifications, especially in the event of the death of one of the owners.
With joint tenancy, each person owns the whole property. The group acts as a single owner in the eyes of the law, which means that you must take out a single mortgage. Everyone must agree if you want to sell the property, and all parties share the liabilities and assets equally.
If one owner dies, then the property will automatically and immediately transfer to the survivor or survivors. You cannot will your share of the property to someone else. As there is no will involved in the transfer of the property, the survivor can avoid the lengthy and costly probate process, wherein the will is reviewed to confirm it is valid.
Joint tenancy is most commonly chosen by married couples. However, it is best to speak to your solicitor before deciding to enter a joint tenancy, as many advise against it unless there is a positive reason for it.
Tenancy in common
As tenants in common, each person owns a distinct share of the property. These shares don’t have to be equal, and are calculated as a percentage rather than a monetary value.
For instance, if three people are buying a property together, the shares could be split as 33% each or 50% for one and 25% for the other two. Regardless of how the property shares are divided, everyone must still agree should you want to sell the property.
Legally, it is possible to take out separate mortgages on a property if you register as tenants in common. However, it is rare to find a mortgage lender that will offer this, so generally you will still take out a joint mortgage.
When one of the owners dies, they can will their share of the property to whomever they choose. Married couples may decide to go with this option if, for instance, they want their children to inherit the property instead of the surviving spouse.
Generally, business partners, friends, or unmarried couples will opt for tenancy in common, but it is not uncommon for married couples to choose this option as well.