Nominating the most suitable tenancy is an important part of the buying process when multiple purchasers are involved.
Ideally, purchasers should nominate a tenancy when completing an Offer and Acceptance, rather than waiting until the settlement process.
Their choice of tenancy has real implications for their home ownership – so as an agent, it’s important to make the purchasers aware of their choices. Whether they nominate Joint Tenants or Tenants in Common, their choice will affect survivorship and how the property can be sold.
It also has more complex tax implications.
For example, purchasers Mr and Mrs Slender* originally nominated to be Joint Tenants on their new property, as they were married and had no plans to sell their shares of the property separately. Later, however, their accountant advised them that for tax purposes, they should be Tenants in Common with a 60-40 share in the property.
If purchasers change their mind between completing an Offer and Acceptance and settlement date, this may alter the amount of stamp duty payable. And while home owners can change their tenancy after settlement by carrying out a related party transfer, the associated costs mean that it’s in their best interest to get it right the first time.
To ensure buyers don’t regret their choice of tenancy, alert them to the two types of tenancies and advise them to speak with an accountant about the implications of their choice.
*Name changed
Image by Victor1158 via Flickr.
