Joint tenancy - a historical anachronism which should be scrapped?

15 November 2018

Property can be owned jointly in two ways: as Beneficial Joint Tenants or as Tenants in Common.

Joint tenants own the whole property with no individual specified share; when one party dies the whole property passes automatically to the survivor.

In contrast, with tenants in common, each owner has a defined share in the property and is free to deal with this as they want; if one party dies, their share in the property will pass under their Will or by intestacy.

The separate concepts of joint tenants and tenants in common are found only in common law jurisdictions (Commonwealth countries and former UK colonies like the USA).

Joint tenancy

The concept of joint tenancy stems from a time when married women couldn’t legally hold property; married women themselves were almost regarded as a ‘chattel of their husband’ and everything a wife owned became her husband’s property. Many academic lawyers now question the relevance of a joint tenancy in 21st century society due to:

  • property rights of married women have long since been recognised;
  • the diversity of modern relationships.

The Australian Law Reform Commission has recommended that where the title of a property does not specify how it is held jointly, the law should now presume a tenancy in common. They reason that people are unfamiliar with the distinction between the two methods of holding property jointly and, in the absence of any specific decision having been made, implying a tenancy in common is more likely to ensure fairness and be in keeping with expectations.

The joint tenancy remains popular in the UK due to its cost-effective convenience, where the production of a death certificate is enough to update the Land Registry Title, and to avoid the hassle and cost of probate. The government’s new ‘death tax’ (where probate fees are calculated on the value of an estate) which comes into force in April 2019, makes the joint tenancy even more cost effective; the value of property passing by survivorship will be left out of the account when calculating the new fees.

Generally, since the introduction of the transferable inheritance tax nil rate band in 2007, the tax usefulness of a tenancy in common for married couples (when coupled with a nil rate band discretionary trust in a Will) has fallen away.

Tenants in common

The advantages of a tenancy in common, essentially ‘control’ and ‘choice’ still remains. You can leave your share of the property to whomsoever you want, sell your share, and in the event of conflict with your co-owners, ensure they don’t get their hands on your share (if you were to die during a divorce process for example).

Joint ownership of property is no longer the preserve of married couples; modern society and rising house prices mean properties are co-owned by persons in a whole raft of different relationships, from lovers, to siblings, to flatmates. For the millions of unmarried co-owners, the tenancy in common allows contributions to the purchase price and outgoings to be determined, and a formula agreed by which the proceeds on sale will be divided. Deciding these issues at the outset, at a time of house-buying harmony, and evidencing them in a declaration of trust will pay dividends in avoiding any further argument as to who gets what if the relationship sours.

With increasing co-ownership by people in a myriad of unmarried relationships, should the tenancy in common be the new norm?

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