Tenants in Common vs Joint Tenants for UK landlords

The question is about property ownership. When you're buying property with someone else, whether it's a business partner, spouse, or fellow investor, one of the most important decisions you'll make happens long before you collect your first month's rent.

You can own a property as either ‘joint tenants’ or ‘tenants in common’. How you hold the title determines what happens to your share if you die, how you can sell your portion, and how profits are divided. The question is about property ownership.

For landlords building a portfolio, getting this right from the start can save thousands in legal fees and family disputes down the line. Ready to try August, see the compliance feature.

What does Tenants in Common mean?

Tenants in common is a form of property ownership where two or more people each own a distinct, separate share of the same property. Think of it as owning a percentage of the whole rather than owning the whole together.

Each owner holds their share independently. You might own 50%, 25%, or even 70% depending on your agreement. These shares don't have to be equal, which makes tenants in common particularly useful when co-owners are contributing different amounts to the purchase or when investment partners want to reflect varying levels of financial commitment.

What differentiates tenants in common:

Independent shares - Each property investor owns a definite portion of the rental property. Your percentage share belongs to you alone, not jointly to all owners.

Flexible proportions - Shares can be unequal and reflect actual contributions. For example, If you pay 60% of the deposit, you can own 60% of the property.

Transferable ownership - You can sell, gift, or mortgage your share without needing permission from the other property owners, though finding a buyer for a partial share can be challenging to a third party.

Inheritance rights - When you die, your share passes according to your will, not automatically to the surviving co-owners. Remember to upload all your documents to August for safe storage.

For landlords, this structure offers control and flexibility. If you're investing with a business partner and want to ensure your share goes to your children rather than your partner's family, tenants in common achieves that. If you're putting in different amounts of capital, it allows you to hold proportional shares that reflect the actual investment each person made.

What are Joint Tenants?

Joint tenants is the other main form of co-ownership in England and Wales. Unlike tenants in common, joint tenants own the property together as a single entity. There are no separate shares. All owners hold 100% of the property collectively.

The defining feature of joint tenancy is the "right of survivorship." When one joint tenant dies, their interest automatically passes to the surviving joint tenant(s), regardless of what their will says. The property doesn't form part of the deceased's estate.

Key characteristics of joint tenants include:

Equal ownership - All joint tenants own equal shares. You cannot be joint tenants with one person owning 60% and another 40%.

Four unities - Joint tenancy requires four unities:

1. unity of possession equal right to occupy

2. unity of interest in other words identical shares

3. unity of title covering ownership acquired through the same document

4. unity of time whereby ownership was acquired simultaneously

Right of survivorship - When a joint tenant dies, the surviving joint tenant(s) automatically inherit their share. This happens by operation of law, not through the will or probate process.

No independent transfer - You cannot sell or gift just your share. To do so, you must first sever the joint tenancy, converting it to tenants in common.

Joint tenancy is common among married couples and civil partners who want the property to pass automatically to the survivor. It's straightforward and avoids probate, but it offers less flexibility for landlords with complex estate planning needs or business arrangements.

What's the difference between Joint Tenants and Tenants in Common?

The distinction matters profoundly for landlords. Here's how the two structures compare:

Ownership structure - Joint tenants own the property as one entity with no divisible shares. Tenants in common own distinct, separate shares that can be equal or unequal.

What happens at death - With joint tenancy, the right of survivorship means the property automatically passes to surviving co-owners, bypassing your will entirely. With tenants in common, your share forms part of your estate and passes according to your will or intestacy rules.

Selling your property share - As a joint tenant, you cannot sell your portion without severing the joint tenancy first. As a tenant in common, you can sell, gift, or mortgage your share independently, though practically this may be difficult without cooperation from co-owners.

Investment flexibility - Joint tenancy requires equal shares. Tenants in common allows unequal ownership reflecting actual contributions or agreed proportions.

Property estate planning - Joint tenancy limits your ability to leave property to specific beneficiaries because of survivorship. Tenants in common gives you full control over who inherits your share.

Protection from creditors - With tenants in common, if one co-owner faces bankruptcy or legal judgement, only their share is at risk. With joint tenancy, creditors can force a sale of the entire property in some circumstances.

For landlords, tenants in common usually offers more control, particularly when:

• Co-owners are contributing different amounts

• You're building a portfolio with business partners who may change over time

• You are investing with someone other than a spouse

• You want to pass your share to children from a previous relationship

• You want to protect your share from a partner's creditors

How do I choose between Joint Tenants and Tenants in Common?

The right structure depends on your circumstances and objectives. Consider these factors:

Relationship with co-owners - Married couples often prefer joint tenancy for simplicity and automatic transfer. Business partners, siblings, or friends typically benefit from the clarity and independence of tenants in common.

Tax planning - Your choice can affect inheritance tax and capital gains tax treatment. Tenants in common allows more sophisticated tax planning through unequal shares and strategic use of wills.

Estate planning goals - If you want your share to go to specific beneficiaries like children, parents, or a trust, choose tenants in common. If you want the property to pass automatically to your spouse, joint tenancy may suit.

Long-term flexibility - If you might want to sell your share or bring in new investors, tenants in common preserves that option. Joint tenancy locks everyone in together.

Financial contributions - When co-owners contribute unequally, tenants in common allows you to hold shares that reflect actual investment. Joint tenancy forces equal ownership regardless of contribution.

Risks - Tenants in common offers some protection if one co-owner faces financial difficulties, as only their share is vulnerable. Joint tenancy exposes the whole property to each owner's creditors.

Many landlords start as joint tenants with a spouse for a primary residence, then switch to tenants in common as their portfolio grows and estate planning becomes more complex. You can convert from one to the other relatively easily, but it's simpler to choose the right structure from the outset.

Can you change from Joint Tenants to Tenants in Common?

Yes, and many landlords do exactly this as their circumstances evolve. The process is called "severing the joint tenancy" and it converts your ownership from joint tenants to tenants in common.

Severance can happen several ways:

Written notice - One joint tenant can serve written notice on the other(s) stating their intention to sever. This is the most common method. The notice doesn't require agreement from the other owners, just proper service.

Mutual agreement - All joint tenants can agree together to sever the joint tenancy. This is often done through a deed or written agreement.

Course of conduct - Actions that are inconsistent with joint tenancy (like one owner selling their share to a third party) can sever the tenancy automatically.

Bankruptcy or court order - A bankruptcy order affecting one joint tenant or certain court orders can force severance.

Once severed, you become tenants in common, usually in equal shares unless you specify otherwise. The key advantage is that your share now passes under your will rather than automatically to the surviving co-owner.

From a practical standpoint, severance is straightforward. You typically:

1. Serve written notice on the other joint tenant(s) or execute a deed of severance together

2. Register the severance at the Land Registry using form SEV

3. Update your will to specify what should happen to your share

The process usually takes a few weeks and costs a small fee. Many landlords sever joint tenancies as part of inheritance tax planning or when relationships with co-owners change. It's particularly common when couples divorce or when business partnerships evolve.

One important note, you cannot sever a joint tenancy through your will alone. If you want your share to pass to specific beneficiaries, you must sever the joint tenancy while you're alive. Simply writing a will that leaves "my share" to someone else has no effect if you remain joint tenants at death.

How Tenants in Common works for landlords

For landlords building rental portfolios, tenants in common is often the optimal structure. It offers flexibility, protection, and control that matters when you're running property as a business.

Unequal investment, proportional ownership - If one partner provides 40% of the deposit and another 60%, you can split ownership 40/60. This reflects actual contribution and ensures rental income and capital gains are distributed fairly.

Property portfolio flexibility - As the portfolio grows and circumstances change, Tenants in common makes it easier to restructure ownership, sell individual shares, or exit partnerships cleanly. This should be considered.

Introducing new investors - When you want to expand your portfolio and bring in additional capital, This ownership model allows new investors to buy a share without disrupting existing property ownership arrangements.

Isolation of risk - If one co-owner faces financial or legal issues, tenants in common helps protect your share from their creditors, whereas joint tenancy could put the whole property at risk.

Inheritance tax planning - Unequal shares can be used strategically to minimise inheritance tax liability, particularly when combined with trust planning and careful will drafting.

Protecting family interests - If you own property with a business partner, tenants in common ensures that if something happens to you, your share passes to your spouse and children rather than your partner.

From an operational perspective, tenants in common requires slightly more record-keeping. You'll want to document clearly:

• Each owner's percentage share

• How rental income and expenses are split

• What happens if one owner wants to sell

• Procedures for major decisions about the property

• Buy-sell arrangements if someone wants to exit

Many landlords create a formal co-ownership agreement or declaration of trust when setting up as tenants in common. This document sets out the arrangements in detail and prevents disputes later. It's not legally required, but it's strongly recommended, particularly when money and property are involved.

The key advantage for landlords is control. You maintain independence over your share while still benefiting from joint ownership of the physical property. You can plan your estate, structure your taxes, and manage your investment without being permanently locked into the same structure as your co-owners.

How August can help

Managing property ownership becomes more complex when you're holding property as tenants in common with business partners or family members. Keeping track of who owns what, how rental income should be split, and which expenses belong to which property requires organisation that spreadsheets and paper files struggle to deliver.

August is designed specifically for UK landlords who need to stay organised and compliant across multiple properties and ownership structures. Whether you're managing properties alone or with co-owners, August helps you track rent automatically, store critical ownership documents securely, and maintain compliance with UK regulations.

For landlords holding property as tenants in common, August provides:

• Clear rent tracking

• Secure document storage for co-ownership agreements, title deeds, and declarations of trust

• Automated compliance reminders for gas safety, EICR, and other legal requirements

• A tenant app that keeps communication professional regardless of ownership structure

• Financial reporting that makes tax filing straightforward when you're sharing property with others

Getting the ownership structure right is the foundation. Managing it well over time is what separates successful landlords from stressed ones. August takes the administrative burden off your shoulders so you can focus on building your portfolio rather than drowning in paperwork.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice about property ownership structures, inheritance tax, or estate planning.