Types of Property Ownership in the UK

Types of Property Ownership in the UK

There could be any number of reasons why two or more people would want to purchase a property together and jointly own it. There are also many possible combinations of people who might purchase a property together. The most common would be a married couple purchasing a home together, but property can also be purchased jointly by people in a civil partnership, friends, business partners, siblings, or parents purchasing a property jointly with their children to give them a start in life.

In all cases, and whatever your reason might be, you should understand the main types of joint property ownership in the UK to determine which is best in your situation.

Types of Property Ownership in the UK

Purchasing a property as Joint Tenants, also sometimes called ‘Joint in Common’, is when the joint owners have equal rights to the property. There is no defined share of ownership. If one of the Joint Tenants dies, their ownership rights pass automatically to the other. To be clear, a Joint Tenant cannot leave their share of the ownership to another person in their will.

It could make sense when the Joint Owners are a married couple, and the surviving spouse becomes the sole owner of the property. In the case of two business associates, the ownership would transfer to the other business associate, potentially leaving the surviving spouse or children of the deceased owner with nothing.

When joint tenants sell a property, the proceeds are shared equally. However, it is by no means straightforward if one of the Joint Tenants wants to sell and the other doesn’t! The property can only be sold as a whole and only by successfully applying to the courts to force a sale.

Types of Property Ownership in the UK

The second type of joint ownership is called Tenants in Common. Tenants in common each own a specified share of the property. In case of death, the property does not automatically go to the other owner but rather according to the will of the deceased, or the rules of survivorship if there is no will. When one of the tenants in common wants to sell, then the property needs to be sold. Proceeds from the sale will be divided according to each owner’s share.

It is advisable for Tenants in Common to put in place a Trust Deed when purchasing a property together. The Trust Deed will spell out the share of the property that each person owns, and, importantly, can describe the agreed process for selling the property in case one party decides they want to sell. A common clause in a Trust Deed will require that the property must first be offered to the other tenant in common before being sold on the open market.

Deciding Which Types of Property Ownership in the UK is Right for You

Deciding to purchase as Joint Tenants or as Tenants in Common requires a very frank conversation about what can, or should happen if the relationship sours, and what scenarios will play out in the case of death. This will not be an easy conversation to have but it should not be avoided.

The good news: it is possible to change from one form of ownership to another. To find out more, please consult your lawyers or solicitors.