There are a number of factors that may dissuade young couples from entering the property market, but are concerns relating to relationship breakdown valid concerns? Land subject to co-ownership is held on trust and can be held in two ways; as joint tenants or as tenants in common. Understanding the differences between these forms of co-ownership is fundamental to avoiding an unwelcome surprise upon relationship breakdown!
If land is held on trust for a couple as joint tenants, they are treated as having one indistinguishable share and as being one single person. This can be advantageous in that each partner will obtain 50% of the proceeds upon sale. A couple is generally presumed to be acting as joint tenants if they are contributing equally to the purchase price, however, this is not a requirement. As such, this can lead to potential upset if the land is held as joint tenants between a couple who did not contribute equally and thus, would not be anticipating equal shares upon split. Furthermore, this is complicated further by the right of survivorship that passes the full share to the surviving partner upon death of the other, regardless of a valid will or intestacy rules.
Tenants in common
In contrast, when land is held as tenants in common, each partner owns a distinct share that can better reflect their contribution. Opting for this route enables transparency about what each person will own upon separation. This also allows the share to pass to the person’s estate or via normal intestacy rules in event of death. Consequently, this can allow the modern couple to enter into the property market together with some reassurance that their financial future is not left in the hands of someone else. However, it cannot be understated that this is the more complex and ultimately, more expensive approach to co-ownership.
Each approach has its distinct advantages and the best approach will depend on the dynamic of the couple. Some would argue that the fiscally-focused approach of holding land as tenants in common has no place in a relationship built on mutual love and trust! On the converse, is it surprising that young people struggling to enter the property market are apprehensive about entering into such a commitment?