If you're buying a home with another person as tenants in common, the process will be slightly different to buying either as a sole owner or as joint tenants. Also, there are a few important factors that you'll need to consider during the process. To help you, we have put together our guide to buying a house as tenants in common.
1. Decide What Share of the House Each Person Will Own
One of the key differences between owning a property jointly as tenants in common as opposed to joint tenants is that each person owns an identifiable share. Many people choose this option for this exact reason, so if you're buying a house as tenants in common then it's likely you'll already have considered how you want to divide it. If not, then it's important to agree this as early as possible, so that you each know where you stand. Also, if you don't discuss this in advance and you disagree further down the line, this could cause issues and potentially delay the conveyancing process.
2. Arrange Your Mortgage
If you're buying with a mortgage, then you'll need to obtain a mortgage offer in principle before you'll be in a position to make an offer on a property. This will be a joint mortgage between you and the other owner of the property. It's a good idea to speak to a few different mortgage providers to find the offer that's right for you, and make sure that they know you intend to buy as tenants in common.
Another option you have is to speak to a mortgage broker, who will be able to provide you with advice and will have greater access to a range of mortgage deals.Your mortgage provider (or broker) will need you and the other owner to provide comprehensive personal information, including details of your finances, employment and circumstances.
3. Instruct a Conveyancer
As with any property purchase, you should instruct a Conveyancer or Conveyancing Solicitor to carry out the legal work on your behalf. Again, it's worth getting a few quotes before you instruct a Solicitor, so that you know you're getting a good deal. It's not always a good idea to go on price alone – read reviews and look at exactly what is included in the price before you choose a Conveyancer.
At Co-op Legal Services, we can provide you with a free online Conveyancing quote, and all of our quotes include a No Sale No Fee Guarantee.
4. Discuss Financial Arrangements
Once you have decided how the property value should be divided, you also need to decide how other ongoing costs will be covered between you and the other owner. This includes the household bills, renovation and maintenance costs, as well as monthly mortgage repayments.
Also consider what would happen in the future if one person wants to sell their share of the property, or if one person becomes unable to cover their share of the monthly costs.
5. Decide What Should Happen to the Property if One Person Dies
Another key difference between owning a property as tenants in common as opposed to joint tenants is what happens to the property on one owner's death. When a property is owned as joint tenants, then when one owner dies, the property ownership will be transferred to the surviving joint owner under the Right of Survivorship. This does not apply to property owned as tenants in common.
If a property is owned as tenants in common, then when one person dies, their share of the property would form part of their Estate. This would then be passed on to whoever is entitled to inherit it either under the terms of their Will (if they have one) or the Rules of Intestacy (if they don't).
For this reason, it's important to decide what should happen to the property in the event of one person's death, and put provisions in place for this eventuality. Even if the owners do not want to leave their share of the property to each other, there are measures that can be taken to ensure that the surviving owner can continue living in the property after the other person's death. One option is to make a Will that includes a Life Interest Trust.