By Abby Hewitt
Residential Conveyancing Executive (ACILEx)
Buying a house with your partner is an exciting life step and thinking about what would happen if you were to break up or pass away might sound a bit unromantic, but it is important to consider how you want to hold your property to best protect everyone’s interests.
You can own your property as either joint tenants or tenants in common. These terms are a little confusing but in this context, they have nothing to do with tenancy where you rent a house or flat for six months under an assured shorthold tenancy. We will ask you to decide how you want to hold your property and it is very important that you make an informed decision as they are quite different.
If you choose joint tenants, this means that you both own the whole of the property and equally. If one of you were to pass away, the property would automatically pass wholly to the surviving partner. Anything in your will about the property would be overridden, as you cannot pass your share in your will. If you were to separate and sell the house, it is assumed that you own the property equally.
This is commonly chosen by married couples or civil partners who would pass the property to each other in their wills anyway. Inheriting the property because of the ownership as joint tenants is much simpler and cheaper than going through probate, but there often disadvantages (eg tax) and this needs to be considered carefully.
Tenants in common
If you choose tenants in common, this means that you will both own individual shares in the property. This is not based on physical boundaries, but rather shares in the financial interests in the property, which can be in any proportion you agree on. You can own equal shares, or divide the shares as per the amount of money you put in on the purchase, or your contributions during your ownership, like paying more towards a mortgage. You can split it numerically (£50,000 to X, £20,000 to Y) or proportionately (10% to X, 90% to Y). If one of you were to pass away, your individual share will be passed as per your will, or in the absence of a will, by the rules of intestacy. There are many more ways a Declaration of Trust can be drawn up to account for shares now and shares in the future.
Tenants in common is usually chosen where couples have children from previous relationships who they want to leave their share to, or perhaps where siblings, friends, or business partners buy a property. If you were to sell, you would be entitled to your individual shares. We would suggest that you draw up a Declaration of Trust to protect your individual interests, which we would be happy to help you with.
We need to tell the Land Registry how you wish to hold the property when we apply for your purchase to be registered. We can also apply to the Land Registry to alter the way you hold the property at any time, not just when you purchase. You may wish to do this if your circumstances change, such as having children, getting married, getting divorced etc.
Any of the conveyancers here at Chubb Bulleid would be happy to advise further on the best way of owning your property based on your individual circumstances.