What is tenants in common and how does it work?

In some parts of the UK, a mortgage of this size might be enough, but very often even one-bed apartments can be out of budget for many first-time buyers, who are finding themselves priced out of their chosen area.

For those facing this situation, tenants in common arrangements may offer a solution. If you get along well with your friends, siblings or parents and you’re all on a mission to buy your first home, you could use a ‘tenants in common’ agreement to get on the property ladder together. 

Or, if you’re in a relationship, but let’s say you have a larger deposit and you want that to be reflected when your home is eventually sold, you may also benefit from this arrangement.

Key takeaways

• Tenants in common allow co-owners to own unequal shares (e.g., 70/30) reflecting their specific financial contributions.
• Unlike joint tenancies, your share does not automatically pass to co-owners upon death; it is distributed according to your will.
• This structure is ideal for friends, siblings, or partners with different deposit amounts to ensure their investment is protected.
• You can sell or transfer your individual share without permission, though selling the entire property requires total agreement.
• Despite separate ownership shares, all parties are typically 100% liable for the mortgage repayments to the lender.

What is tenants in common?

If you buy a property as ‘tenants in common’, you and the other buyers will each own an individual share of the property as co-owners. This means that when it comes to selling the property, the amount of equity you get out will reflect what you’ve contributed to the deposit and the mortgage over time. This allows co-owners to have different shares, for example, one person could own 30% of the equity in the home while the other owns 70%.

What’s the difference between joint tenants and tenants in common?

A tenants in common mortgage differs from a joint tenant mortgage because each co-owner’s share is separate and reflects what each person has contributed to the house deposit and repayments over the years. With a joint tenants mortgage, the equity in the home is always split equally between owners, no matter how much each person has put in.

For example, if two partners or friends were to get a joint tenant mortgage together. When it comes to selling the property, both owners would each receive 50% of the equity in the home, regardless of who put in what over the duration of the mortgage.

With a tenants in common mortgage, the percentage of equity each owner receives reflects how much they contributed to the deposit and how much they have paid towards the monthly payments. For instance, one owner might receive 60% of the equity, while their partner or friend would receive 40%.

Learn more: What is a mortgage deed?

Ownership division: 

• Tenants in common: Individual percentages (can be unequal)
• Joint tenants: Equal shares (always 50/50)

Right of survivorship:

• Tenants in common: No, share goes to your estate/will
• Joint tenants: Yes; share passes automatically to co-owners

Selling property

• Tenants in common: can sell your share independently; need agreement to sell the whole house.
• Joint tenants: Need permission from all owners to sell.

Best for:

• Tenants in common: can sell your share independently; need agreement to sell the whole house.
• Joint tenants: Spouses or long-term partners.

Some couples choose to buy a house as tenants in common, as it can offer extra protection in case they were to split up. For example, a second-time buyer with a large deposit from the sale of their previous home wants to buy a house with their partne,r who is a first-time buyer with no deposit.

In this case, tenants in common can allow the first-time buyer to get onto the property ladder and begin building equity while also protecting the second-time buyer’s much larger share.

Learn more: Here’s what you need to know if you’re a first-time buyer buying with a homeowner.

Who should consider a tenants in common mortgage?

Tenants in common can be used by partners buying together, but also for those looking to buy a house with friends, siblings or parents. With property prices rising so quickly and many young people struggling to get on the ladder by themselves, there could be a surge in this type of homeownership over the coming years.

Can I sell my share of a house as a tenant in common?

Yes, you have the right to sell your percentage of the house as a tenant in common. In fact, one of the downsides of this agreement is that your co-owner could sell their share of the property without your permission. This means that you could have little control over who moves into the home or owns a share of it. However, if you decide to sell the home entirely, all tenants must be in agreement. You can also transfer your share to them in a transfer of equity, which you need to get consent from your mortgage lender to do.

If you can't reach an agreement, you may need to apply to a court for an ‘order for sale’. This will force the sale of the entire property, which means each owner will have to leave the property.

When you first enter a tenants in common arrangement, it’s wise to have a solicitor draw up an agreement which outlines what needs to happen when one co-owner wishes to sell so everyone is on the same page.

What happens when a tenant in common dies?

In the event of one of the co-owners dying, rather than being divided between the remaining owners, their share would form part of their estate along with any savings, investments and personal items. If they have a will, their share, along with the rest of their estate, would be distributed based on the wishes outlined within the will.

If they don’t have a will, the estate will be distributed based on intestacy rules. These rules are complex, but they essentially determine which relatives will inherit the estate by default if there's no will in place.

This could complicate things for the remaining owners because they’ll have to accept that someone they didn’t originally agree to buy a property with now has a share in it.

If the remaining owners wish to sell their home, they have the right to do so. The beneficiaries of the person who passed away can’t initiate this process, even though they’ll own a share of the property.

How does being tenants in common affect inheritance tax?

Whether you own a property as joint tenants or tenants in common, your share can be subject to inheritance tax if you were to pass away. Inheritance tax is usually only due on estates over £325,000, but the law is complex and there are a number of exemptions and allowances.

If your share of the property goes to your spouse or civil partner when you pass away, no tax will be due. However, if you’re not married or in a civil partnership, the person who inherits the property may have to pay inheritance tax:

• For joint tenants, half of the property’s value will be added to the total value of the deceased person’s estate.
• For tenants in common, the value of the deceased person’s share will be added to the estate.

Can you change from joint tenants to tenants in common?

Yes, it is possible to change from joint tenants to tenants in common and vice versa. If you’d like to switch to tenants in common, this is known as ‘severing’ a joint tenancy. The process varies depending on where you live.

If you live in England or Wales, you’ll need to download a ‘form SEV’ from gov.uk before filling it in and sending it to HM Land Registry. You don’t need the permission of any other joint tenants to do this, but you do need to give them written notice beforehand. You can hire a legal professional to complete the form for you, but they’ll usually charge a fee for this.

If you live in Northern Ireland, you’ll need to complete a ‘transfer of whole’ form and submit it to Land & Property Services. You can download one of these forms from the Department of Finance website.

It’s possible to sever a joint tenancy even if the other joint tenants don’t agree to it. One of the most common ways to do this involves taking out a mortgage on their share of the property and immediately repaying it, but we’d recommend speaking to a solicitor and mortgage broker before doing this.

If you live in Scotland, you’ll need to change the title deeds to the property. It’s usually best to use a solicitor for this because it can be quite a complicated process. The other joint tenants must agree to the change, too.

Can you change from tenants in common to joint tenants?

If you live in England and Wales, you and the other owner(s) will need to fill out a legal document called a trust deed. This is to confirm that you all would like to become joint tenants.

If your property’s title deed has any restrictions, such as a restriction on selling the property unless certain conditions are met, you’ll need to apply to HM Land Registry to cancel these limitations. You can do this by completing a ‘form RX3’ and sending it to HM Land Registry.

If you live in Northern Ireland, you and the other owner(s) can become joint tenants by completing a ‘transfer of whole and or part’ form and sending it to Land & Property Services. This form can be downloaded from the Department of Finance.

If you live in Scotland, you’ll need to change the title deeds to the property. Using a solicitor for this is recommended. The other joint tenants will need to agree to the change as well.

Tenants in common vs joint tenants – which should I pick?

If you’re trying to decide between a joint tenants or tenants in common mortgage, one of the main things to consider is who you’re buying with and how much you’re each putting in.

If you are buying with more than one person, or you’re planning on putting in different amounts towards the house deposit and monthly repayments, a tenants in common mortgage may be best. This way, everything would be kept fair and clear in terms of who owns what.

If you’re buying with your partner or spouse, then a joint tenant mortgage could be right for you as the equity will be shared equally between you. Though there are certain situations where you might be better off as tenants in common, for example, if one buyer is putting down a much larger deposit than the other.