August 27, 2025
reading time: 4 min
Tenants in Common vs Joint Tenancy: Ownership & Inheritance
August 27, 2025
reading time: 4 min
Tenants in Common vs Joint Tenancy: Ownership & Inheritance
Understanding Tenants in Common Ownership Rights
In this article, we will break down these terms to help you understand the meaning of these complex legal concepts and provide you with the knowledge needed to secure your legacy and make informed decisions about your estate planning.
The matrimonial home is often the most significant asset owned by married couples or civil partners. Unless there are compelling reasons for not doing so, spouses and civil partners should consider owning property as co-owners rather than in the sole name of one or the other.
A co-ownership model can be used to reflect the contributions each person has made to the purchase price, or can provide a non-contributing spouse or civil-partner the security of legal ownership. The two main forms of property ownership are «tenancy in common» and «joint tenancy». Each of these allow different variations on how property can be passed on after death.
Tenancy in Common: Flexibility and Independence
Ownership Shares and Rights
When you own a share of a property as tenants in common, you own a specific share of that property. The shareholding may or may not be equal. Each shareholder retains the right to independently manage, transfer, sell or bequeath their share. This ownership structure allows each person to plan their estate independently as they have autonomy over what happens to their share.
Transferability and Freedom
Property held under a tenancy in common passes by Will or intestacy, not automatically to the surviving co-owner. A tenancy in common provides greater flexibility as it allows the first co-owner to die to leave his or her share to someone other than the surviving owner, for example to children. However, as the outcome of this would be shared ownership between the surviving co-owner and the children, there is a danger that the children may wish to sell the house to realise their inheritance rather than allow the surviving co-owner to continue to live in the property.
Potential for Disputes
While the independence granted to a co-owner under a tenancy in common can be an advantage, this mode of ownership can also lead to conflict. Disagreements can arise over whether to invest in repairs and renovations, or how costs should be divided. It is therefore wise for co-owners to put clear agreements in place so that everybody understands where they stand.
Joint Tenancy: Seamless Transition and Unity
Equal Ownership and Partnership
Joint tenancy means two or more people own equal shares of a property. Each person has rights to the whole property, which encourages shared responsibility. This mode of ownership is often chosen by couples or close partners who want unified ownership.
Right of Survivorship
Holding a property as joint tenants means that on the death of one spouse or civil partner, his or her interest in the property immediately and automatically passes to the survivor. The term for this transition is ‘survivorship’. This cannot be prevented by anything said about the property in the Will. All that the surviving joint owner needs to prove absolute ownership of the property is the death certificate of his or her spouse. A joint tenancy therefore avoids the costs and delays involved in obtaining a grant of representation on the death of the first joint tenant to die and, if the survivor is a spouse or civil partner, the interest in the property is exempt from inheritance tax on the first death.
Limitations
While joint tenancy offers simplicity in the transition of property, it also limits flexibility. Owners cannot independently decide to bequeath their share to external parties, as succession by survivorship takes precedence. Careful consideration is required to ensure that a joint tenancy aligns with your long term estate planning goals.
Choosing the Right Form of Ownership
Each individual’s specific circumstances and estate planning intentions should be considered when choosing between owning a property as tenants in common or joint tenants, as well as the following key factors:
- Control Over Your Share: If retaining control over who inherits your share is important, then a tenancy in common would tend to be the better choice. This allows you to specify in your Will who will receive your share of the property.
- Simplicity in Transfer: If you prefer a straightforward transfer of property upon your death, a joint tenancy would tend to be more suitable. The right of survivorship ensures your property automatically goes to the co-owner(s).
- Long-Term Considerations: Consider how your decision may affect future generations: a tenancy in common allows you to create a legacy by passing on your share to children, grandchildren, or other heirs, offering long term security for your family.
- Immediate Access: Joint tenancy provides surviving owners with immediate access to the property, allowing them to continue residing in or managing it without legal delays. This is particularly beneficial for spouses who rely on the property as their primary residence.
- Probate Considerations: Joint tenancy minimises legal fees and delays in the distribution of assets. However, it is essential to consider any potential tax implications or unintended consequences when choosing this ownership structure.
- Avoiding Disputes: Consider the relationships between co-owners. A tenancy in common allows for individual decisions, which can prevent disputes if the owners have different plans for their shares.
- Future Planning: Future life changes could have a significant impact on the decision about ownership. Later life remarriage after one of the spouses passes away could be a significant risk in a scenario where property is owned as joint tenants.
Mortgage
Where a matrimonial home is subject to a mortgage, regardless of whether that home is owned as tenants in common or joint tenants, that mortgage debt should be covered by suitable insurance. This ensures the mortgage is fully paid when the borrower dies, without needing to sell the house. If two people share the mortgage, they can choose whether the insurance pays out on the first or second death. It is usually preferable for the policy to pay out on first death.
Is it possible to convert a joint tenancy to a tenancy in common and vice versa?
Where a joint tenancy exists and the testators wish to pass their respective shares to, say, their children from previous relationships, the joint tenancy has to be 'severed'. There is a legal process that allows one to convert a joint tenancy to a tenancy in common. This process includes establishing how the property is currently held. This can be done by checking the Title Register of the property which can be found online. A Notice of Severance can be drafted to enable a joint tenancy to be converted to a tenancy in common. Consult with our professional estate planning practitioners to check your structure of ownership and take the necessary legal steps.
Taxes and Property Ownership
Property ownership structures can affect tax liabilities. With a joint tenancy for married couples or couples in a civil partnership, the property passes automatically to the surviving owner — this usually avoids inheritance tax (IHT) at that stage. Under a tenancy in common, each person owns a separate share, which can be passed in accordance with their Will or intestacy rules. If the total estate (including property, savings, and other assets) is below the IHT threshold which is now set at £325,000, no inheritance tax is due. Above this, tax may apply unless other exemptions or allowances are available.
Both forms of ownership can also give rise to Capital Gains Tax (CGT). This could occur in a situation where the property is sold and it is not the owner’s main residence. The gain is calculated on the increase in value since purchase, minus allowable expenses and annual CGT allowances. In the case of a tenancy in common, each co-owner is responsible for CGT on their individual share, while in a joint tenancy the gain is divided equally between the owners. Careful planning can help reduce potential CGT liability, such as through spousal exemptions or timing the sale effectively.
Consult with our professional estate planning practitioners to evaluate possible tax liabilities.
Case Studies
Case 1: Tenancy in Common
Mr Smith owns a property with his brother. They hold the property as tenants in common. Mr Smith wants to ensure his children inherit his share. By specifying this in his will, he maintains control over the distribution of his share, ensuring his wishes are honoured. If the structure of ownership had been a join tenancy, then regardless of Mr Smith’s wishes the property would automatically pass to his brother.
Case 2: Joint Tenancy
Mrs Johnson owns her primary residence with her husband as joint tenants. Upon her passing, her husband automatically becomes the sole owner without needing to go through probate, providing him with financial security and peace of mind. Mrs Johnson’s husband benefits from immediate access to the property, allowing him to continue living there without legal interruptions. This stability ensures his financial well-being and emotional comfort during a challenging time.
Conclusion
Understanding the differences between tenancy in common and joint tenancy is crucial for effective estate planning. There are benefits and challenges in each option, and the right choice depends on your individual circumstances and goals.
By considering factors like control, transfer simplicity, and potential disputes, you can make an informed decision that aligns with your wishes. Consult with our professional estate planning practitioners who are able to help in identifying the best ownership structure for you depending on your circumstances and goals.
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