What happens to a property when a co-owner dies in England and Wales?

What happens to a property when a co-owner dies in England and Wales?

If you own a property jointly with someone else, it is important to understand what happens if one of you dies. The outcome depends on how the property is legally owned, and this can have a significant impact on inheritance, estate planning and the rights of the surviving owner.

In England and Wales, there are two main ways of owning property jointly, joint tenants and tenants in common.

Joint tenants

When a property is owned as joint tenants, both owners effectively own the whole property together, rather than hold distinct shares.

A key feature of joint tenancy is the right of survivorship. This means that when one owner dies, their interest automatically passes to the surviving owner, regardless of the terms of the deceased’s will.

For married couples and civil partners, this arrangement can simplify matters, as the property passes automatically and does not form part of the deceased’s estate for this purpose. Although, a Grant of Probate may still be required for other assets, dealing with the property is usually more straightforward.

The surviving owner will normally need to notify HM Land Registry and provide a copy of the death certificate so that the title can be updated.

Is a joint tenancy always the best option?

Joint tenancy does not allow the deceased to leave their interest in the property to anyone else under their will. This can create difficulties in second marriages or blended families, where an owner may wish their share to pass to children from an earlier relationship rather than automatically to their partner.

Tenants in common

Where a property is owned as tenants in common, each owner holds a separate share in the property. These shares are often equal, but they do not have to be.

Each owner can leave their share to a chosen beneficiary under their will.

When one owner dies, their share forms part of their estate and passes in accordance with their will or, if there is no valid will, under the intestacy rules. This can result in the surviving owner co-owning the property with a new party, such as the deceased’s children or another beneficiary.

Unlike joint tenancy, the deceased’s share does not pass automatically to the surviving owner. It must be dealt with as part of the estate administration process, which will usually require a Grant of Probate or, where there is no will, Letters of Administration.

This can lead to practical issues. For example, the surviving owner may wish to remain living in the property, while the new co-owner may prefer a sale. Where agreement cannot be reached, legal advice may be required.

Can ownership be changed?

If a property is currently owned as joint tenants, the ownership can be changed by severing the joint tenancy. Once severed, the owners hold the property as tenants in common, enabling each owner to decide who should inherit their share.

This is often considered as part of wider estate planning, particularly in cases involving second marriages, blended families, or where parents wish to protect their children’s inheritance.

What happens to the mortgage?

If there is a mortgage, the lender should be informed as soon as possible following the death.

Where there is more than one borrower, the surviving borrower will usually remain responsible for the mortgage repayments. In some cases, life insurance may repay the mortgage, but where this is not in place, the surviving owner will need to continue making payments.

Are there any tax implications?

Inheritance Tax may be payable depending on the value of the estate and the available exemptions. Transfers between spouses and civil partners are often exempt, but this is not always the case.

Capital Gains Tax may arise if an inherited share is later sold and the property is not the owner’s main residence.

Conclusion

Understanding how your property is owned is essential, as it can significantly affect what happens after your death.

Joint tenants benefit from the automatic transfer of ownership to the surviving owner, whereas tenants in common allow each owner to leave their share under their will.

How Pinney Talfourd can help

If you are unsure how your property is held, our Residential Property team can assist.

If you would like advice on whether your current arrangements are suitable for your circumstances, our Private Client Team can also advise on severing a joint tenancy and explore other options to ensure your estate planning is aligned.