When two or more people buy a property together there are two ways the property can be held, either as Joint Tenants or Tenants in Common.
When you co-own a property as joint tenants, each co-owner owns the whole of the property and neither owner has a specific or identifiable share.
If you sell the property, you are each entitled to half the sale proceeds regardless of how much you each contributed to the purchase price or to the mortgage repayments. Neither co-owner has a separate share in the property that can be sold.
When you die, the surviving co-owners will automatically own the whole of the property, regardless of any wishes you may have made in your Will regarding the property. This is called the Right of Survivorship.
If a property is held under a joint tenancy, you can't leave it to someone else in your Will. It will automatically transfer to the other Joint Tenant.
This type of ownership is ideal for couples who wish to leave property to each other when they die.
However, if you enter a joint tenancy agreement and have children from a previous marriage or relationship, it could mean that when you die, your children will not inherit a share of that property.
For initial advice and guidance on writing a Will or how buying a property can affect your estate, please see Making a Will.
Severing a Joint Tenancy
If you currently own property jointly as joint tenants, it is possible to change it into tenants in common. This is called a Notice of Severance.
You might wish to do this for a number of reasons, such as a change in your relationship with the co-owner or to put your half of the property into a trust. As the majority of properties are registered at the Land Registry, this will involve an application being made to add a note to the register of the title to the property.
Tenants in Common
If you co-own a property as tenants in common, each co-owner owns a specific share of the property. This is typically a 50% share each, however it is possible to hold unequal shares.
As you each own a separate share in the property you are all entitled to leave your individual share to your chosen beneficiaries in your Will. If you do not have a Will when you die, your share will pass to your nearest living blood relatives according to the Rules of Intestacy (law).
A tenancy in common agreement is ideal for people who wish to own property jointly with their partner but wish to leave their share of the property to someone else when they die. It is also appropriate for people who have children from a previous marriage as they can guarantee that their children will benefit from their estate when they die, provided they have written a Will.
People worried about the cost of care home fees can also benefit from this type of ownership as by owning property as tenants in common, should you require full time care in the future, you will only be means tested on your share of the property, meaning you can potentially reduce the amount of care fees payable.
For more information see Wills Case Study - Care Home Fees and article answering Can I Use a Will to Protect My Estate from Care Home Fees?