There’s nothing like the feeling of having your offer accepted on a property you’ve fallen in love with – especially if you’re going to share it with the person you’ve fallen in love with! You may feel that you’ve done a lot of the hard work, but there are still some ‘grown up’ decisions you have to make, such as how you’ll own the property between you.
Buying a house with your partner
Your conveyancing solicitor, who oversees the legal side of the purchase of the property, should spell out the ownership choices you face. She or he should also explain what it could mean for you. However, it’s worth having an understanding of what the different options involve.
If you buy as joint tenants:
- If you own your property as joint tenants, you split the ownership between you. You own the property jointly. It doesn’t matter how much each of you pays towards the mortgage (or, indeed, whether one of you pays anything at all); each of you owns an equal share of the property.
SAVVY TIP: You can ‘sever’ a joint tenancy, which means that property ownership is converted to tenants in common. You can do this by filling a form called SEV, which is available on the Land Registry website. Alternatively, you can ask a solicitor to arrange it for you.
In Northern Ireland, the process will depend on whether or not your property is registered with the Land Registry or Registry of Deeds. Your best route is to talk to a solicitor.
SAVVY TIP: Don’t worry about the fact that the word ‘tenant’ keeps cropping up. It doesn’t mean that you’re a tenant in the way you are if you rent property. It’s just a bit of legal jargon.
If you buy as tenants in common:
- If you own your property jointly as tenants in common you can split the ownership unequally. However, you have to do this with a specific legal document, called a deed of trust or declaration of trust. If you don’t have this document, you will own the property equally between you.
It’s useful if one of you pays towards the deposit and the other doesn’t and you want that reflected in the way you own your home. You could decide that one of you will own 60% of the property and the other will own the remaining 40%.
SAVVY TIP: The main difference between buying as joint tenants and as tenants in common is what happens to your property after you die (I’ve explained it below).
Owning property jointly and your will
It might seem a bit grim to think about what happens when you die, when you’re contemplating buying a home together. But it’s worth knowing that how you own your home could affect who inherits it when you die.
If you own as joint tenants:
When one of you dies, your share of the property automatically passes to your partner even if you haven’t mentioned your house in your will or you haven’t made a will.
If you own as tenants in common:
Your share of the property passes to whoever you’ve said you’d like to leave it to in your will. It won’t go to your partner unless you’ve said that’s what you want. It means if you die without a will (which is called dying intestate), your share of the property could pass to your parents or your brothers and sisters.
SAVVY TIP: It’s useful to talk through the ownership implications before you see your conveyancing solicitor. There’s more information on an excellent independent information website called Advicenow.
Which is best?
Most married couples (and those in a civil partnership) and an increasing number of people who live together, decide to own their property as joint tenants. But there are exceptions. If you’re going to buy a home with your partner, it may be a good idea to own it as tenants in common if:
- One of you has paid most or all of the deposit or your parents have provided the money.
- One of you will be paying a bigger percentage of the mortgage than the other and you want ownership of the property to reflect that.
- You have been married before and have children from your first marriage. If you buy your property as tenants in common, you can pass on your percentage of the property to your children, rather than to your partner, if you prefer.
SAVVY TIP: If you choose to own your home as tenants in common you must draw up an agreement, called a declaration of trust [link to jargon buster] to spell out how much each of you owns. It should cost between £100 and £200 to draw up, but it will be money well spent.
Why a declaration of trust matters
You might think that if you own your property as tenants in common, work out between you how you’re going to split ownership and pay different amounts towards the mortgage, you’ll have done enough to demonstrate your intentions. Unfortunately that’s not true. In 2007 a couple who’d lived together took their case to the House of Lords (Stack v Dowden) after they couldn’t agree on how to the proceeds of the house sale should be divided after they split up.
- In their case, the judge said they could split the proceeds 65%/35%, but only because they’d never mixed their finances and because one partner had provided the whole deposit.
- However, the ruling also said that in general, the courts would presume that couples intended to split ownership 50:50 unless they had an agreement in place that said something different.
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