Joint tenants vs tenants in common: which should you choose?

Buying a home is a significant milestone, but for co-buyers it can also create financial uncertainty. A declaration of trust sets out each party’s ownership shares and protects individual financial contributions, particularly where deposits are unequal or family members provide funds. It is commonly used by couples, friends, or relatives purchasing together. For broader budgeting, see our guide to the Costs of buying a house in the UK: the complete 2026 breakdown. A residential conveyancing solicitor can help ensure the document is properly drafted and reflects the parties’ intentions from the outset.

Key takeaway: How do I protect my larger deposit when buying a house?

To protect a larger deposit, you may need to hold the property as tenants in common and execute a declaration of trust (property). This legally binding document records each person’s specific financial contribution and can state that, on sale, you receive your initial investment back before any remaining equity is split.

Clear legal documentation and tailored advice can help protect your financial position.

What is a declaration of trust and how does it work?

A declaration of trust is a legally binding document that sets out the financial arrangements between joint property owners. It separates legal ownership from beneficial ownership. Under section 53(1)(b) of the Law of Property Act 1925, it must be in writing to be enforceable.

It is used when owners do not intend to share sale proceeds equally and sets out what happens on sale or buyout.

It usually covers:

• Deposit contributions
• Ownership shares
• Mortgage and other cost responsibilities
• Sale or buyout terms
• Right of first refusal

The difference between joint tenants and tenants in common

When buying a property with another person, you must choose the type of legal ownership, which affects what happens to your share if you die or the relationship ends.

Being joint tenants means owners hold the property together with no defined shares, and the right of survivorship applies, so the property passes automatically to the surviving owner.

Tenants in common means each owner has a defined share (e.g. 70/30 or 50/50), which can be left in a will.

The table below compares the main ownership types.

Why you need a declaration of trust for unequal contributions

If you put in more money when buying a property (such as savings or a gifted deposit), not having a declaration of trust may mean you are still treated as if you own it 50/50.

A declaration of trust is used to:

• Protect unequal contributions (especially deposits)
• Secure family gifts or inheritance money
• Set clear ownership shares and exit rules for joint buyers

Example: Sarah puts £60,000 into a £300,000 flat, James puts nothing, but they split the mortgage equally. A declaration of trust can state that Sarah gets her £60,000 back first if they sell, before splitting any remaining profit.

Risk without it: Sarah could lose the protection of her contribution and end up sharing sale proceeds equally.

How a declaration of trust (property) interacts with the Land Registry

HM Land Registry records legal ownership, not beneficial shares. A Form A restriction may be added to help protect beneficial interests, but it does not set out the shares itself.

Under HM Land Registry Practice Guide 24, the standard wording can include:

“No disposition by a sole proprietor… is to be registered unless authorised by a court order.”

Key forms:

• Form SEV: to sever a joint tenancy into tenants in common
• Form RX1: to apply for a restriction after purchase
• Form JO: to declare a trust at the time of purchase

Case example:

Two friends buy a property. If one later wants to sell, a Form A restriction can help ensure capital money is paid to the appropriate trustees, helping protect each party’s beneficial interest.

Can a declaration of trust be challenged in court?

Yes, but usually only in limited cases:

• Fraud or misrepresentation
• Duress or undue influence
• mistake
• Lack of independent legal advice in some cases

Proper drafting can make challenges more difficult.

Case study:

In some UK cases, a trust deed may be set aside if there is evidence that the parties later agreed to change the shares through their actions. This is very difficult and expensive to prove. It is far better to update the deed if circumstances change.

Stamp Duty Land Tax (SDLT) and mortgage lender requirements

When creating or changing a declaration of trust, you must consider Stamp Duty Land Tax (SDLT), which may apply if “chargeable consideration” (money or mortgage debt) is involved.

HMRC examples:

1. Gifts: Father gifts a £200,000 property with no mortgage → no SDLT, not notifiable.
2. Mortgage assumption: Mother gifts a £200,000 property with a £180,000 mortgage → SDLT is due at the appropriate rate on £180,000, unless relief applies.
3. Transfer of share: Husband transfers 50% of a £300,000 property; wife takes £100,000 of a £200,000 mortgage → notifiable even if no SDLT is due.

Mortgage lender notification:

Most lenders will need to be informed if you enter into a declaration of trust. The deed cannot override the lender’s rights if the mortgage is not paid. Your solicitor may need to notify the lender via a “notice of trust” to ensure compliance and avoid issues with the mortgage terms.

Property insurance may still matter, but it does not replace a declaration of trust that accurately records each party’s contributions and responsibilities.

Declaration of trust cost and the role of a solicitor

FAQs

What is a declaration of trust?

A declaration of trust defines how property ownership is split between co-owners. It records deposits, mortgage contributions, and each person’s share of equity on sale.

How much does a declaration of trust cost?

Usually between £250 and £600, depending on complexity (a basic deposit split compared with detailed arrangements).

Can a declaration of trust be challenged?

Yes, but only in rare cases such as fraud, duress, mistake, or lack of independent legal advice.

A declaration of trust (property) can be an important tool for co-buyers. It sets out each person’s financial contributions and ownership shares, helping to prevent disputes and protect investments such as savings or gifted deposits. Combined with a tenants in common arrangement and the correct Land Registry restrictions, it creates a clearer legal structure for shared ownership.

This guide provides general information only and does not constitute legal advice. Property laws and tax regulations (SDLT) are subject to change.

KEY TAKEAWAYS:

• Ownership structure: Consider tenants in common if contributions are unequal, so each owner has a defined share protected by a declaration of trust.
• Legal protection: A declaration of trust should be supported by a Form A restriction at HM Land Registry to help ensure both parties’ shares are protected on sale.
• Professional guidance: A solicitor can be useful, as templates risk errors and may be challenged later due to lack of proper advice or incorrect drafting.