Home ownership types and occupation rights
Main forms of ownership for owner-occupied property, and freehold, leasehold and commonhold, the different ways in which land and property can be owned.
Sole and joint ownership
Legal ownership refers to the ownership of the legal title to the land. Beneficial ownership can arise if a non-owner contributes to the purchase of the property and there is an agreement with the legal owner. In the absence of an agreement or promise from the owner, beneficial ownership cannot arise.
When someone buys a home on their own, only their name appears on the title deeds and mortgage deed. If more than one person buys a home jointly, there are two types of ownership to choose from. The owners can become joint tenants or tenants in common. A solicitor can give further advice.
Sole ownership means that one person only is the legal owner of the property, even though other people may be living there or may have contributed to the purchase price. A person who is not a legal owner can establish a beneficial interest in the property. Proving a beneficial interest is difficult and requires specialist legal advice.
Joint tenants hold the property equally, with none of them having a distinct share of the equity. If one tenant dies, their interest passes automatically to the other joint tenant(s) by right of survivorship, regardless of what is stated in a will. This form of joint ownership is commonly used by established couples.
Severance of a joint tenancy
In order to avoid the effect of survivorship, a joint tenancy can be converted into a tenancy in common in a number of ways. This could be, for example, as a result of the ownership of the property having been set up in unequal shares, or where a charging order has been made against the beneficial interest of one of the joint tenants.
This is particularly relevant in cases of relationship breakdown. Separating couples should get specialist advice for determination of their respective beneficial interests (ie shares).
Tenants in common
Tenants in common hold distinct shares of the equity in a property, but the legal title to the land remains jointly owned. The shares do not have to be equal. Either owner can leave their share in their will to anyone they choose. If they die without leaving a will, the share passes under the intestacy rules.
This form of ownership is the most common way for groups of friends to buy property together and may be more appropriate for unestablished couples living together.
Most residential property is registered land, and information about ownership is included in the proprietorship register held at the Land Registry. A copy of this can be obtained from the Land Registry for a small fee.
In the case of unregistered land, the owner's name is contained in the title deeds. Title deeds are usually held by the lender (if there is a loan on the property), by the solicitor involved in the conveyance, or by the owner themselves.
Ownership of a property may be freehold or leasehold. Freehold ownership is unlimited in time.
There is no higher interest in land than freehold and it equates to outright ownership. A freehold lasts forever and the right to occupy can only be affected in limited circumstances, such as compulsory purchase or repossession by a lender or creditor who has secured a loan on the premises. A freeholder may sell their interest or may grant lesser interests, such a long lease or a tenancy, to others.
Ownership of a property may be freehold or leasehold. Unlike freehold, leasehold properties are let on a long lease that is for a fixed term.
Leasehold is an interest in property held by a tenant from a landlord for a time limited period on payment of rent or a lump sum. The terms tenancy and lease have the same legal meaning, but the term tenancy is usually reserved for short leases.
A person with a long lease, normally one that is for more than 21 years, may grant shorter sub-leases or may assign the remaining period of the lease to someone else. In addition, a long leaseholder may have the right to purchase the freehold, or a share in the freehold where the premises is a flat. At the end of the period of the lease the property reverts to the landlord. The rights and obligations of the landlord (or lessor) and tenant (lessee) are contained in the lease, as well as in statute.
Commonhold is an interest created by statute, which is designed to overcome the situation that can arise with leasehold ownership where one person owns the lease and another owns the freehold. In commonhold, there is no overall landlord, and ownership of the entire property, including the shared parts, is by the owners of the each unit (usually a flat) in the building, through a commonhold association.
Last updated: 10 March 2021