Individuals can own property in a two ways, as joint tenants and as Tenants in Common.  Tenancy in common is different from joint tenancy in how the property is owned.

What is the difference between Joint Tenancy and Tenancy in Common?

Many married couples choose to own their property through joint tenancy simply due to perceived convenience, the fact they don’t anticipate splitting up, feeling awkward about not owning on this basis and sometimes ignorance of the significant implications of the difference between joint tenancy and tenancy-in-common. Joint tenancy generally means  that  both owners own the whole property as an indivisible whole.  If one of the joint tenant owners dies then the property will transfer automatically to the other joint.

However, more and more properties are being owned through the system of Tenancy in Common.  There are no upper limits to the amounts of tenants in common and each tenant in common will own a specific share of the property, which will be designated in the deeds of the property.

If one of the tenants in common dies they can then have their proportion of the property transferred to another party, for example a family member, while the other owners of the property maintain their legal interest in the property and live on there.

For example, a property could be owned by 3 siblings as tenants in common, each owning a 1/3 share.  One of the siblings dies and under his will he leaves his interest in the property to his 2 children in 2 even shares.  Once the transfer is complete there are now 4 owners instead of 3.  The original siblings each own 1/3 and the children of the deceased sibling now own a 1/6 share as the original 1/3 share is split in 2 even shares.

Alternatively you could have a property owned by a two people where the property is divided 75% to 25%, or a different ratio if desired.  In the event of a sale any profit made on the sale of the property would have to be divided through the same ratio.

Why choose Tenancy in Common?

Crucially if a property is owned through joint tenancy in the event of death of one owner then the property would automatically transfer to the surviving spouse.

Tenancy in common is useful where you wish to specify the percentage of the share say between siblings, parents and children or partners in a business relationship.

Apart from the advantages that a business relationship would have from having the share worked out there are also advantages in terms of the Inheritance Tax that may become liable in the event of death.    Under the current Inheritance Tax regulations there is no tax payable on any property or assets that are willed between married couples.

What is Adverse Possession?

Adverse possession or “squatting” is the process by which a person, who is not the legal owner of a piece of land, can become its legal owner after occupying it for a certain period of time. This period of time is determined by whether the land is registered or unregistered.

Registered land is land which is has been registered with the Land Registry. The Land Registry’s purpose is to have a record of land in England and Wales including details of any dealings with that piece of land such as a sale, mortgage or lease. Any land which has not been recorded by the land registry yet is known as unregistered land.

Adverse Possession and Unregistered Land

The time period for adverse possession on unregistered land is the continuous occupation for 12 years. The same rule applies to registered land where the occupation was for a period of 12 years ending before 13^th October 2003.

Adverse Possession and Registered Land

On 13^th October 2003 the rules on adverse possession and registered land changed so that in order for someone to become the legal owner of a piece of land they have would have to continuously occupy it for 10 years.

The Third Category

There is a rare third category, which is where a claim for adverse possession is being made against land belonging to either the crown or the church, which requires continuous occupation for 60 years and 30 years respectively.

Proving a Claim for Adverse Possession

The rules for proving adverse possession are the same, regardless of whether we are dealing with registered or unregistered land.

To claim legal ownership through adverse possession, the person making the claim must show uninterrupted factual possession of the land. In order to prove this, the applicant must show that they have had physical control of the land in the same way that a legal owner might have controlled the land. For example, if a claim for adverse possession of a field is being made, the occupier would need to show that they maintained that land in the same manner that any reasonable legal owner would have such as cutting the grass or maintaining the boundary or fence to exclude any outsiders.

They must also show an intention to occupy it without the legal owner’s consent i.e. they must have no right to the land whatsoever (so persons with a lease or licence to enter the land cannot make a claim for adverse possession) and they must not be occupying the land accidently, for example, a situation where there is uncertainty over a boundary line.

Registering for Adverse Possession

If you wish to make an application for adverse possession and the property is registered, you need to apply to Land Registry and the relevant form is form ADV1 and pay a fee of £150.00. You will also need to ensure that the form has an appropriate statement of truth together with suitable supporting evidence (which may include photos or statements from third parties).

The Land Registry will usually send a surveyor to visit the land before granting anyone legal ownership of the land.

Exceptions

There are times when an occupier cannot make a claim for adverse possession, for example: where the legal owner has a disability and can’t make decisions or communicate them, where the occupier has already started a different legal process to own the property, where the property is ‘held in trust’ or where the application for adverse possession is being used to settle a boundary dispute.

It may be useful to note that an evicted person can still make an application for adverse possession provided they make the application for registration within six months after being evicted, they were entitled to apply for adverse possession the day before the eviction and they were not evicted pursuant to a court order for possession.

The above link is to an excellent and very interesting blog post in today’s Guardian – one of the features of the rapid changes in society in the last 20 years has been the breakdown of family bonds and the culture of the individual. As the Guardian point out in this article, economic conditions are now forcing a rethink and families are being forced to start living together again.

Do you think this is a regressive step or is it instead an example of some good coming out of these difficult economic conditions ?

Residential leases can be short term leases, typically assured shorthold tenancies of 6 months or a year or long leases where the leaseholder is effectively the owner of the property. On this page we focus on long residential leases.

A long residential lease requires the lessee (also known as tenant) to pay a ground rent, which is some cases can effectively be nothing (a peppercorn) or in more modern developments can be upwards of £500.00 a year to the lessor (the landlord/owner).

 The term of the lease refers to the length of it and usually a lease of 21 years or more is considered a long lease. Most flats and apartments are not freeholds but long term leasehold of between 99 to 125 years. Unlike freehold, leasehold does not give you full ownership rights but with long leases the difference is in some respects academic, the value is in the leasehold rather than freehold interest; it rather provides you with the right to occupy the premises for a specific period of time. As the time on the lease expires it will slowly start decreasing in value. It should be noted however, that with the vast majority of leases they can be extended so that the property never reverts back to the freeholder i.e the lease does not expire.

How is the value of a residential lease affected with time?

Usually, a long residential lease of between 99 to 125 years will keep its value for around 20 years. Once it hits the level of 80 unexpired years, the value will start slowly decreasing and the leasholder should look to extend the lease back up to a longer length.

If there are less than 70 unexpired years lenders will not be as willing to provide a mortgage. At that point, the cost of extending the lease is higher also due to a technical legal issue known as “marriage value”. It can be difficult to sell a leasehold property with less than 70 years unexpired. With less than 50 unexpired years, you will be very unlikely to find a buyer and probably the only purchasers interested will be either property investors or cash buyers.

What are the advantages of residential leases?

The advantage as a long term tenant is that a residential lease is almost like a freehold because the length of the lease may often be longer than the tenant’s own length of life. Also the freehold owner will be responsible for repairs, management and maintenance of the entire property (i.e. block of apartments). Furthermore, when a landlord decides to sell the property, he or she is legally required to offer the tenant an option to buy the freehold before it is offered to anyone else. Even if you cannot afford to buy the freehold due to its price, the landlord will not be able to sell the property for anything less than the price that he offered to you. If within the 12 months of offering you the property, the landlord reduces the price of the property he or she will need to inform you and offer a further chance to purchase at the reduced price.

Can I extend my residential lease?

When a long lease approaches 70-80 years left, many leaseholders may wish to renew or extend their lease to ensure that it does not significantly decrease in value. To extend your lease you will need to serve a notice stating your full name and address along with further information about your eligibility to extension, the price that you offer and details of the current lease (such as ground rent). Providing that the landlord (either freehold owner or higher leaseholder) agrees, the lease will be renewed for further 90 years at a zero ground rate. The procedure is complex and there are pitfalls for the unwary so it’s important to get legal advice before you start the process.