Joint Tenants Versus Tenants In Common – What Do They Mean?

You’ve probably heard of the terms “joint tenants” and “tenants in common” but not really understood the difference between them. So, what do they mean?

Joint Tenants

When you own a property with another person, whether that be your spouse or a friend of a relative, it is common for you to hold this property as joint tenants. Let’s use an example of person A and person B. A and B are married and are joint tenants and therefore own their property equally, 50:50.
If A were to pass away, then their 50% share automatically passes to B via the survivorship rules. This means that B will own 100% of the property. This occurs irrespective of A’s Will.
If A and B decided to sell their property, the money would be split equally between them.
Regarding care home fees? Well, if A needed to go into a care home, then B could remain living in the property. Under current rules, as A and B are married, the value of their property would be disregarded for care funding. If however B wasn’t a relative of A’s living in the property meeting the disregard criteria (see Care and Support Guidance 2021), then the Local Authority may place a charge over the property so that when it is sold, the outstanding care fees are paid.

Tenants in Common

You may have heard, or have been advised, to ‘sever’ your tenancy. This means that rather than owning your property as Joint Tenants, you would own it as Tenants in Common.
Let’s use our example of person A and person B again. If A and B own a property as Tenants in Common this time, they may hold it as 50:50, or they may choose to define their unequal shares such as 60:40 or 70:30. Please note, it is advised to enter into a Declaration of Trust if you are opting for unequal shares.
If A were to pass away, rather than their share automatically passing to B, it is instead passed according to their Will, or intestacy rules. For example, A may wish for their share to pass to their daughter. As a result, the beneficial interests of the property would be owned by A’s daughter and B.

It is therefore really important when you sever your tenancy that you make or update your Will to accurately reflect your wishes so that your share of the property passes to whoever you want it to.

Regarding care home fees? Whichever ownership you have, should A need to go into care, the Local Authority can only place a charge over A’s percentage of the property owned by them.

If you want to discuss severing your tenancy, updating your Will or care funding, please call our Private Client and Care Funding team on 0800 088 6004.