A Guide to Joint Ownership

There’s no point in beating around the bush. A property is the single biggest purchase you will ever make. You will pour obscene amounts of money, more than you’ve probably ever seen or ever will see again, into a deposit for your very own slice of land. It’s a complicated process, that’s made even more complicated if you’re buying with a partner/loved one/friend.

Before you get started, as unromantic as it may seem, it’s important that you seek advice from a solicitor before purchasing a home. You need to understand your rights in the event of death or separation.

1. Firstly you have to choose between the two types of joint ownership. Joint Tenants each own an equal share of the property, however when you die, your share goes to your partner and you can’t bequeath your share in a will. Tenants in Common can each own a different share of the property, however it allows them to pass on or gift their share in the property, and your share doesn’t automatically revert to the partner in the event of your death (unless you want it to).
   
   The type of tenants you are will be defined by a solicitor, making the eventual sale of the property more streamlined.
   
   
2. Should you be buying a house with the intention to put it on the rental market, you’ll want to consider the type of joint ownership carefully. With Joint Tenants, the split of the rent is 50/50 like the split of the share. If it’s Tenants in Common, you may have less of a share of the income.
   
   
3. It is possible to swap between the two joint tenancies. Many choose to switch from joint tenants to tenants in common to allow for greater flexibility in the event of a divorce or separation. Mutual consent isn’t necessary as one partner can serve the other with a “notice of severance”.
   
   
4. Joint ownership is also helpful for buying a second home, on which Capital Gains Tax is payable. Capital Gains Tax is a tax levied on the profits of the sale of a property or investment. Both owners can take advantage of the £11,100 limit on the tax when selling a property.

Should there be any doubt about a partner’s ability to make a legal decision based on their mental capacity, then the other owner will have to apply to the Court of Protection before he or she can sell the property. This means you’re protected from being forced to sell a property through dishonest means.