Advice on ownership of property

It is vitally important that you take advice and understand how property ownership works in the UK, as it can make a huge difference if your circumstances change.

Basically there is two ways a couple can own a property:-

  1. Joint Tenants
  2. Tenants in Common.

Joint Tenants

This is where a couple own the property together. There is no distinction between you and you must act together as a single owner. Neither of you will own a specific share. You cannot give away a share in the property in your will. A will made by joint tenants leaving the property to anyone other than the other joint tenant, will make the will invalid.

When one of the Joint Tenants dies. The survivor will automatically become the owner of the whole property.

Tenants in Common

This is where each party owns a specific share, normally 50/50, however can be split differently depending on your circumstances. This means that should one owner die, their share of the property will pass into their estate and dealt with by their personal representatives. If no will has been made then the rules of intestacy would apply.

A Will and property protective trust are generally used by couples who want to leave their share to the children, whilst the other person can remain living in the property and then pass on their share when they die. This method can be very useful for protecting your main asset (your home) against potential creditors. It also protects your home in the event of separation, divorce or marriage/cohabitating after the death of a spouse/partner, as the children would own 50% of the property (or whichever percentage you agreed upon)

Take Advice on all aspects of buying a property.

Not all Mortgage Advisers are the Same

Advice Case study:

House Purchase price – £180,000

Mortgage – £120,000

Miss Smith and Mr Jones are single and have been living together for some time, they decided to buy their first home together. They saw a local mortgage adviser for advice, who arranged their new mortgage, but did not go into detail or offer advice as to how they could “own” their new property. When they received the paperwork from their solicitor, they did not understand the difference and assumed because they were joint on the mortgage, they ticked the “joint tenancy” option on their paperwork.

Unfortunately, things did not work out as planned and after a year they decided to separate. This is where a knowledgeable, professional adviser would have made all the difference by giving them full advice on property ownership.

Mr Jones was only working part-time and had no savings.

Miss Smith was the main bread winner & had the deposit in savings of £60,000.

She also made some major refurbishments to the property thereby increasing the value substantially to £240,000.

The situation now is, Mr Jones is entitled to £60,000 (50% of the equity in the property) having not paid anything towards the property.

Miss Smith is now faced with having to re-mortgage to give Mr Jones his share,(£60,000) or sell the property, which is the case as she is unable to raise the additional £60,000 required.

If They had taken Advice

Firstly had they taken advice correctly at the start of the home buying process and owned the property as “Tenants in Common.”

Secondly with a more realistic split of 95% owned by Miss Smith and 5% owned by Mr Jones, then Miss Smith would only have to pay Mr Jones £6,000.

Which would be a more realistic figure for the initial investments made into the property.

* This is a real case, but the names have been changed

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