When purchasing property jointly in the UK, understanding how you legally hold the property is crucial for protecting your investment and ensuring your wishes are respected.
Properties can be held either as beneficial joint tenants or as tenants in common, with each form of ownership having significant legal and financial implications for property owners.
Quick Navigation
- What Are Beneficial Joint Tenants?
- Key Benefits of Beneficial Joint Tenancy
- When to Choose Beneficial Joint Tenancy
- What Are Tenants in Common?
- Benefits of Tenancy in Common
- When to Choose Tenancy in Common
- Changing Between Ownership Types
- Declaration of Trust Explained
- Inheritance Tax Implications
- Frequently Asked Questions
- Get Expert Legal Advice
What Are Beneficial Joint Tenants?
Beneficial joint tenancy is a form of property co-ownership where all owners hold equal shares in the property as a single entity. This arrangement creates what legal professionals refer to as the “right of survivorship.”
As beneficial joint tenants, you and your co-owner(s) are treated as a single owner for legal purposes, despite there being multiple names on the deed. This has several important implications:
- All owners hold an equal share of the property regardless of contribution
- The property is owned as a unified whole rather than in separate portions
- Upon selling the property, proceeds are split equally among all owners
- If one owner dies, their share automatically passes to the surviving owner(s) (right of survivorship)
- An owner cannot pass their share to someone else in their will
Example: Beneficial Joint Tenancy in Practice
Sarah and Michael purchase a home in Enfield as beneficial joint tenants for £300,000. Even though Sarah contributed £200,000 and Michael contributed £100,000, they each legally own 50% of the property. If Michael passes away, Sarah automatically becomes the sole owner of the entire property, regardless of what Michael’s will might state about his assets.
Key Benefits of Beneficial Joint Tenancy
Choosing to hold property as beneficial joint tenants offers several advantages in specific circumstances:
- Simplified inheritance – The property automatically passes to surviving owners without going through probate
- Protection for spouses – Ensures a surviving spouse isn’t left without their home
- Administrative simplicity – Equal ownership means less paperwork and potential for disputes
- No need for a Declaration of Trust – The law clearly defines how the property is owned
- Clear legal status – Both owners have equal rights and responsibilities regarding the property
When to Choose Beneficial Joint Tenancy
Beneficial joint tenancy is typically most suitable in the following situations:
- For married couples or civil partners who want straightforward property ownership
- When owners want to ensure the surviving partner automatically inherits the property
- For parents purchasing with adult children when they want the property to eventually pass to the child
- When all parties are contributing equally to the purchase
- For owners who view their relationship as a long-term partnership
In our experience at Adel Jibs Solicitors, many of our Enfield and Edmonton clients choose beneficial joint tenancy for family homes where their primary concern is ensuring the property passes smoothly to a surviving spouse.
What Are Tenants in Common?
Tenants in common is an alternative form of property co-ownership where each owner holds a distinct share of the property. Unlike beneficial joint tenancy, these shares can be equal or unequal.
When you own property as tenants in common:
- Each owner holds a specific percentage share of the property
- Shares can be unequal (e.g., 70%-30%, 60%-40%) based on contribution or agreement
- When selling, each owner receives their proportional share of the proceeds
- If an owner dies, their share passes according to their will or intestacy rules
- There is no automatic right of survivorship
Example: Tenancy in Common in Practice
David and Emma purchase a home in North London as tenants in common for £400,000. David contributed 75% (£300,000) and Emma contributed 25% (£100,000). Their ownership reflects this split. If David passes away, his 75% share would go to whoever is named in his will (perhaps his children from a previous marriage), while Emma would retain her 25% share.
Benefits of Tenancy in Common
Holding property as tenants in common provides several distinct advantages:
- Flexible ownership shares – Can reflect different financial contributions to the purchase
- Estate planning freedom – Each owner can decide who inherits their share
- Protection for children from previous relationships – Ensures they can inherit your property share
- Potential inheritance tax planning – Can be structured to minimize tax liability
- Protection from care home fees – May help shield some property value from assessment
When to Choose Tenancy in Common
Tenancy in common is typically most suitable in the following situations:
- When co-owners are contributing unequal amounts to the purchase
- For blended families where owners want their share to pass to their own children
- For business partners investing in property together
- When owners want to minimise inheritance tax through careful estate planning
- For friends or relatives buying together who aren’t in a romantic relationship
- To protect property from potential care home fee assessments
Many of our clients in the Enfield and Edmonton areas choose tenancy in common when purchasing investment properties together or when they’re in second marriages with children from previous relationships.
Changing Between Ownership Types
It’s possible to change how you own property from beneficial joint tenants to tenants in common or vice versa. This process is known as “severing the joint tenancy” or “creating a joint tenancy.”
Severing a Joint Tenancy
To change from beneficial joint tenants to tenants in common:
- Complete a ‘Notice of Severance’ form
- Have all owners sign the document
- Register the change with HM Land Registry
- Consider creating a Declaration of Trust to specify ownership shares
Creating a Joint Tenancy
To change from tenants in common to beneficial joint tenants:
- All owners must agree to the change
- Complete a deed of trust specifying joint tenancy
- Register the change with HM Land Registry
These changes can have significant legal and tax implications, so we strongly recommend seeking professional legal advice before proceeding. Our conveyancing team at Adel Jibs Solicitors can guide you through this process efficiently and ensure all documentation is properly prepared and registered.
Declaration of Trust Explained
A Declaration of Trust (also known as a Deed of Trust) is a legal document that records the financial arrangements between property co-owners, particularly for tenants in common.
This important document typically specifies:
- The percentage share each owner holds in the property
- How the purchase costs were divided (deposit, mortgage, legal fees)
- How ongoing costs will be shared (mortgage payments, maintenance, bills)
- What happens if one party wants to sell their share
- Arrangements if the relationship between owners breaks down
- Procedures for buying out another owner’s share
If you wish to hold property as tenants in common in unequal shares, a Declaration of Trust is essential to legally protect each owner’s interest. Without this document, disputes can arise later about the intended ownership shares.
For properties in Enfield, Edmonton, and throughout North London, our solicitors can draft a custom Declaration of Trust that accurately reflects your specific circumstances and protects all parties’ interests.
Inheritance Tax Implications
How you own property can significantly impact inheritance tax planning:
Inheritance Tax for Beneficial Joint Tenants
For beneficial joint tenants, the entire property automatically passes to the surviving owner(s). For married couples and civil partners, this transfer is exempt from inheritance tax. However, it may increase the value of the surviving partner’s estate for future inheritance tax calculations.
Inheritance Tax for Tenants in Common
For tenants in common, each share is treated separately for inheritance tax. This can offer planning advantages, as each owner can use their individual inheritance tax allowance (nil-rate band) and potentially reduce the overall tax burden on their estate.
Important: Inheritance tax rules are complex and subject to change. We strongly recommend consulting with a solicitor and financial advisor to develop an appropriate strategy for your specific circumstances.
Frequently Asked Questions About Beneficial Joint Tenants and Tenants in Common
Can beneficial joint tenants have unequal shares in a property?
No. By definition, beneficial joint tenants always own equal shares of the property, regardless of their financial contribution. If you want to own property in unequal shares, you must hold it as tenants in common.
How do I know if I own my property as beneficial joint tenants or tenants in common?
You can check your property’s title register with HM Land Registry. If there’s a “Form A restriction” on the register, you own as tenants in common. If there’s no such restriction, you likely own as beneficial joint tenants.
Can one beneficial joint tenant sell the property without the other’s consent?
No. All beneficial joint tenants must agree to sell the property. A single owner cannot sell their “share” as the property is owned as a unified whole.
What happens if tenants in common disagree about selling the property?
If tenants in common cannot agree on selling, one owner can apply to court for an “order for sale.” The court will consider various factors before deciding whether to force a sale.
Can I change from beneficial joint tenants to tenants in common without the other owner’s consent?
Yes. Any joint tenant can unilaterally “sever” a joint tenancy by serving a notice on the other owner(s) and registering it with the Land Registry. However, changing from tenants in common to beneficial joint tenants requires all owners’ consent.
Do beneficial joint tenants need a Declaration of Trust?
Beneficial joint tenants don’t typically need a Declaration of Trust as the law clearly defines their equal ownership. However, tenants in common usually need one, especially with unequal ownership shares.
What happens to a beneficial joint tenancy if the owners divorce?
Divorce doesn’t automatically change a beneficial joint tenancy. However, the court has the power to transfer property ownership as part of the divorce settlement, which may involve severing the joint tenancy.
Get Expert Legal Advice on Property Ownership
The decision between holding property as beneficial joint tenants or tenants in common can have significant long-term legal and financial implications. At Adel Jibs Solicitors, our experienced residential conveyancing team can provide tailored advice based on your specific circumstances.
Speak to Our Residential Conveyancing Specialists
For expert guidance on beneficial joint tenancy, tenancy in common, or Declaration of Trust matters, please contact our solicitors in Enfield:
- Phone: 02034173859
- Email: info@adeljibssolicitors.co.uk
- Office: Our Enfield office is conveniently located to serve clients throughout North London, including Edmonton and surrounding areas
“Adel Jibs Solicitors provided excellent advice on setting up our property ownership structure. Their expertise in beneficial joint tenancy matters gave us peace of mind knowing our property interests are protected.” — Michael and Sarah, Edmonton homeowners
Don’t leave your property ownership to chance. Contact our team today to ensure your property is held in the way that best meets your needs and future plans.
