As many as 17 million people in the UK own a property with another person. However, just 12 per cent of these know they have a tenancy in common agreement, while 63 per cent know they are joint tenants.
Tenants in common means each person owns a fixed share of the home, for instance if they contributed a higher proportion of the deposit, they may have a greater stake of the asset. If they sell the property, they will receive the percentage they own, or if they die their share will go to the person they have named in their will.
Comparatively, joint tenants have equal rights and ownership over the home, and when one dies, the ownership passes to the other automatically.
Despite not as many joint homeowners having a tenancy in common arrangement, Ocean Finance, which released the research, said this agreement is “becoming better understood by homebuyers”.
Ian Williams, a spokesman for the firm, said: “With more couples getting financial support from families with their deposit, or putting in their own savings, splitting the ownership allows them to preserve their share.”
He went on to say this type of ownership also helps older homeowners have protection from care expenses.
While councils can recoup costs for long-term care from the sale of a patient’s property, for those who are tenants in common, they are only allowed to do this with the share that person owns, not the entire home. However, if homeowners have a joint tenancy arrangement, local authorities are allowed to recover costs from the full value of the house.
As the Land Registry recently revealed the average house price has now reached £226,807 – increasing by 8.9 per cent over the last year – having a tenancy in common contract could make a huge difference to older people who have to fund care costs.
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