Joint Property Ownership Explained
For varied reasons, (often economic), many people are now purchasing or investing in property with relatives or friends and not just partners. However, before committing to a joint property ownership it is vitally important to discuss at the outset what you all want to get out of the purchase, how this is going to be funded between you; how long you plan to live together or invest and what happened if one of you wants to sell your share of the property in the future or if one party dies.
In order to best protect each parties’ legal and beneficial interest in the property it is advisable to hold your interests as ‘Tenants in Common’ either in equal or unequal shares (depending upon the sums contributed by each party). It is also advisable to draw up a ‘Trust Deed’, which would specifically set out how your respective interests in the property are to be held; how said interests would subsequently be dealt with upon any relationship breakdown, re-sale or death of any party.
The Trust Deed would set out the details of the arrangements, including;
- The amount each purchaser contributed to the purchase price
- The respective share owned
- The contributions to outgoing costs (insurance, decoration etc)
- Contributions to mortgage payments and what would happen if one party refuses to pay
- Agreement on how to value the property on sale
- Rights of refusal on a resale (i.e. one party does not wish to sell or moves out remaining on the title)
- How the property or sale proceeds are to be distributed between the parties
Other considerations are additional Stamp Duty Land Tax payable upon a purchase where one or more parties already owns a legal or equitable interest in another property either in the UK or abroad and potential Capital Gains Tax or Inheritance Tax implications where property is transferred between parents and children.
The Conveyancing team are experienced in joint property ownership and can advise you accordingly. For further information and a personalised quotation please contact a member of the team who will be happy to help you.