Last year, an English housing survey found that home ownership levels in the UK are at an all time low. In fact, they have reached their lowest rate since 1985. Given the cost and inconvenience of buying alone, as reflected in these statistics, many people now choose to make this huge investment with another person. Whether you’re buying as part of a couple, or with a relative or friend, there are some essential steps that you’ll need to take in order to protect your interest.

Joint Tenants or Tenants in Common?

When you buy a property with another party this may be as Joint Tenants or Tenants in Common. Either way, you will both be legal owners of the property but there are some key differences that could become particularly important if the relationship breaks down or if one of you passes away

  • Joint Tenants. If you’re Joint Tenants if something happens to one of you then, as a result of the “right of survivorship” the whole property will pass to the remaining Joint Tenant, regardless of any Will and regardless of your financial contributions towards the purchase price of the property.
  • Tenants in Common. Tenants in Common, have separate identifiable shares in the property. They don’t have to be equal shares. If one person passes away, their share can be passed on in accordance with their Will and does not automatically pass to the surviving person.

If you buy as joint tenants with someone and the relationship breaks down, it will be important to seek legal advice with a view to severing the Joint Tenancy with notice so that you become Tenants in Common. It can be difficult to establish shares in a property once a relationship has broken down so it is advisable to declare any shares at the outset, upon the purchase of the property.

A Declaration of Trust

Creating a declaration of trust for a property can be very useful where the situation is not straightforward, for example one person has contributed more towards the deposit or is paying a higher share of the mortgage. The declaration of trust will set out how the property is owned and will make it easy to identify the shares (known as beneficial interests)  in it. A declaration of trust is a simple way to protect your beneficial interest and avoid costly disputes further down the line.

A cohabitation agreement

If you’re buying property with someone else then a cohabitation agreement may be essential. This simply sets out the agreement between individuals who live together, or intend to live together. So, it may record assets that one person is bringing in to a relationship and/or provide a structure for what will happen if the parties to the agreement decide to go their separate ways. Like a pre-nuptial agreement, a cohabitation agreement is not legally binding in the UK but is governed by the rules of contract law and the courts have discretion as to whether or not it should be upheld. It’s worth noting that there is no such as thing as a “common law husband or wife” – something that people living together as a couple often believe provides this kind of protection. So, cohabiting couples will need to create their own protection with a cohabitation agreement if there is no interest in marriage.

When purchasing a property with someone else it is essential to ensure that you have a clear understanding of ownership and a record of interest. This could save time and money in the future if any of you decide to go your separate ways.

For help with any property matter contact Helen Akroyd at Mewies Solicitors on 01756 799000.  For cohabitation agreements contact our Family Law team on the same number.