Buying a house with a partner – what to watch for

With marriage rates decreasing and the number of cohabiting couples (those not in a marriage or civil partnership) on the rise, it’s no surprise that there is an increase in people looking at buying a house with a partner. It’s a natural step in many relationships and it allows you to pool your finances to purchase and maintain the property together. But it’s also very important to ensure you have the right legal and financial protections in place.

What does “joint tenancy” mean?

If you’re buying a house with a partner as joint tenants, you’ll both own the property equally – there are no separate, identifiable shares. You both share the financial obligations and any benefits of joint ownership.

Joint tenancies can be created by married and non-married couples, friends, relatives, and business associates.

If one of the joint tenants dies, the property immediately passes to the other owner. This means individual owners can’t pass what they consider ‘their share’ of the property to a beneficiary in their Will. Unless the co-owners are married or in a civil partnership, inheritance tax may still be payable.

Joint tenants must act as one in the eyes of the law. So, individual tenants would not have the option of only mortgaging their share of the property, for example. All of the tenants would have to take out a joint mortgage.

Speak to a fee-free mortgage broker at our partners L&C to discuss your mortgage options when buying with a partner.

What does “tenancy in common” mean?

As tenants in common, when buying a house with a partner, you each own separate identifiable shares in the property. And tenants in common don’t have to own equal shares of the property. They can each act individually, which means they can leave it to a beneficiary in their Will.

So for example, tenants in common could each own 50/50 or 70/30. Upon death, that share will pass in accordance with that person’s Will or following the rules of intestacy (when someone dies without leaving a will) it may not go to the surviving owners.

While in theory “tenancy in common” gives you the option of mortgaging their share of the property, in reality finding a lender willing to lend in these circumstances would be difficult because the lender wouldn’t be able to enforce a sale if the mortgager defaulted.

Can tenants in common take out a joint mortgage?

Yes, when buying a house with a partner you can take out a joint mortgage if you’re tenants in common. In fact, most lenders will allow up to four applicants to take out a joint mortgage. Speak to a fee-free mortgage broker at our partners L&C to discuss buying a house with a partner today.

Can a joint mortgage be paid by one person?

Yes, a joint mortgage can be paid by one person in the UK. Lenders won’t care about the breakdown of who pays what towards the mortgage. But bear in mind, both parties are liable for repaying the debt.

Transfer of ownership into joint names

If you already own a home and then marry or find a partner, you might then want to divide ownership between you by doing a transfer of ownership. The simplest way to do this is as a gift, since no money changes hands and there are no taxes to pay. Your spouse or partner is simply added to the title deeds as a joint tenant so you own the property jointly between you.

Alternatively, you can do a ‘transfer of equity’ in which your partner buys a share (typically 50%) of the property’s value. Note that the partner might have to pay stamp duty if the value of their share (equity plus mortgage taken on) is over £125,000. You’ll also need to pay a solicitor to handle the transfer of equity process.

Find a lawyer to undertake your transfer of equity now.

I own my house and my boyfriend is moving in – will he have a claim on the property?

If you’re cohabiting, according to the Law Society, you will not usually have any rights to the property if you don’t own the property or a share in it, unless you can prove you have:

• contributed to the deposit for the house or the mortgage payments, or
• made a financial commitment, like paying for major work on the house, with the understanding that you would own a share of the house

However, even if you believe you have a strong case, pursuing it can be an expensive process as you will need a solicitor and take action through the courts.

Similarly, when one partner owns the house in the UK, if the owner of the property relies on contributions to mortgage payments and utility bills from their partner (who is not a joint tenant and not married to them), he or she has no legal obligation to make those contributions and could legally stop whenever they want.

To get around this you should seek legal advice about drawing up a legally binding cohabitation agreement. This is a legal document between unmarried couples who are living together. It sets out arrangements for finances, property and children while you’re living together and if you split up, become ill or die.

You can make an agreement at any time. It’s good to do it before you move in together. But you may want to consider one if you decide to have children or get a mortgage. According to the Law Society, the cost of getting an agreement can vary depending on your circumstances so ranges between £300 and £4,000. A solicitor will give you a free estimate and it’s worth shopping around and comparing the costs and services.

I own half a house what are my rights in the UK?

This depends. If you’re joint tenants, (sometimes called ‘beneficial joint tenants’) you have equal rights to the whole property, the property automatically goes to the other owner if you die and you cannot pass on your ownership of the property in your will. However if you’re tenants in common, you can own different shares of the property, the property does not automatically go to the other owners if you die and you can pass on your share of the property in your will.

A Deed of Trust can be done by a conveyancing solicitor alongside handling all the other legal elements of your house purchase. Get instant quotes from our conveyancing panel today.

A Deed of Trust or similar agreement when you purchase could also set out the agreement between you as to who will make the payments towards the property. Although, if the mortgage is in joint names you are both liable to meet the payments and the lender will not heed any private agreement. If there is a default on the mortgage the lender will see you both as equally liable.

I’ve got anxiety about buying house with partner – should I go ahead?

It may be natural to feel some level of anxiety about buying a property with a partner because it’s a big step. But before going ahead you need to establish why you’re feeling anxious and whether the reasons should make you step back and reconsider your plans.

The most important thing is to be open with your partner from the start. While it feels negative, you should both sit down and plan for the worst while being optimistic for the best. There are a number of steps that you can take to protect your finances.

Steps to reducing anxiety about buying house with partner

1. Speak to a fee-free mortgage broker about what you can afford. It’s helpful to have an early conversation about both your finances with the broker and ask any questions you may have.
2. Understand the steps of buying a home and costs of buying a home. Knowledge is power and you both need to know what this big step involves.
3. Decide how you will each contribute. You’ve probably already had conversations about how you want to handle your joint life financially. For example, many cohabiting couples have a joint bank account for bills etc which they pay into each month. When buying a house with a partner, how will you want to handle contributions to the mortgage and maintenance of the property?
4. Decide a tenancy. If you are contributing different amounts to the purchase, you may want to register the property as “tenants in common” which allows you to own in unequal shares. You can then set out in a Deed of Trust how your shares are calculated and what might happen to the shares in different scenarios. If you want to own everything together the title of “joint tenants” allows you to do that. Speak to your conveyancing solicitor when you are buying your home to explore what works best for you.
5. Protect any gifted deposits. A deed of trust can also protect gifted deposits from parents.

What are the alternatives to joint ownership?

If one of the main reasons you have for buying a house with a partner is because you think you can’t afford to get on the property ladder on your own, then it’s important to look at your other options first.

• Boost your deposit with a Lifetime ISA: Anyone aged 18-39 can open a LISA and save up to £4,000 each tax year towards their first home or retirement and the government will then give you a 25% bonus on your contributions, up to a maximum of £1,000 per year. But you should shop around for the accounts offering the best rates and be aware of the pitfalls when it comes to withdrawing your money by reading our guide to the Best Lifetime ISAs.
• Shared Ownership: Shared ownership allows you to partly own a property. This means you may be able to afford to go it alone rather than buying a house with a partner.
• Guarantor Mortgage: This is when someone, usually a parent, takes on some of the risk of the mortgage by acting as a guarantor. This enables the borrower to take out a bigger mortgage than if they apply for a traditional mortgage on their own, sometimes with no deposit, on 100% of the property’s value.  Find out more in our in our guide Guarantor Mortgages Explained.
• Help from parents: apart from Guarantor mortgages, there are a number of other ways parents can help to make it more affordable to get a mortgage. See Bank of Mum and Dad – How to help your child buy a home.
• 100% mortgage: if the main hurdle for you is the deposit and you have a track-record of renting, then a 100% mortgage may be an option to consider. See 100% mortgages – should I get one?
• Rent to Buy: This scheme allows you to rent a home at around 20% below the market rent for up to 5 years to allows you to save for a deposit to put towards your first home. Read our guide on Rent to Buy.

For more information on schemes to help you buy your first home read our guide on What will replace Help to Buy?

How to buy a house with a partner, what next?

If you’ve decided that buying a house with a partner is right for you, get mortgage advice and you should speak to your solicitor or conveyancer dealing with the purchase of your home. They can help talk through the above options with you.

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