You may own or you may rent your home – and, indeed, any other residences, whether in the
UK or abroad. The ownership or lease may be in your sole name or held jointly with someone
else, for example your spouse or partner.
Under English law, there are two types of joint ownership:
1. A ‘joint tenancy’ (even if the property is freehold) under which each joint tenant
has an equal share. On the death of any joint tenant, his/ her share passes
automatically ‘by operation of law’ to the surviving joint tenant(s) and if more than
one in equal shares. This is a common arrangement with a married couple and the
principle applies to other types of property, e.g. bank accounts (see my Post of 26
September 2023). If the survivor is a spouse/civil partner, remember that the
exemption from Inheritance Tax will apply, but that in any other case there may
be Inheritance Tax IHT) implications; similarly, with a tenancy in common,
below.
2. A ‘tenancy in common’ (again, which can apply to a freehold) under which the
share of any so-called ‘tenant in common’ is an asset owned that can be specifically
given by Will – or indeed by lifetime gift. Shares under a tenancy in common can
be unequal.
In either case, the value of the interest in the property is an asset of the deceased, the value of
which must be ascertained and included for probate purposes. That said, unless the other joint
owner is a surviving spouse or civil partner (when the IHT exemption would apply), there will
typically be a valuation discount of 10% for IHT purposes.
In any event, your possessions will need to be removed from the property, assuming that your
surviving spouse or partner or inheriting child is not to carry on living there. Think about
who would do this: it can be onerous task, though sweetened if those with the responsibility
will also inherit.
If you rent your home, especially if you are the only tenant, obviously the landlord should be
notified and the terms of the lease consulted, in case there is a continuing liability to pay rent
(and other services) for a particular period of time. It may be possible to bring the lease to an
end early.
Even if a flat or house is subject to a long lease, for which you have paid a lump sum premium
(where there may also be a continuing liability for annual ground rents), the freeholder (which
may be a company) will have to be notified, as well as perhaps a residents’ association or
management company. Again, the value of the remaining lease will be an asset in your estate.
As also where the house or flat is owned freehold. Where the flat is freehold, typically you
will have a long lease, with the freehold owned by a company in which you own one or more
shares.
Where you have a lease, your Executors should be aware of the continuing obligation to meet
both ground rent obligations and service charges. In some cases there may be a requirement
to pay a percentage of sale proceeds to the freeholder.
Either a lease or a freehold may be subject to a mortgage. The mortgage company (or
‘mortgagee’) should be notified. Death will end the automatic debit of monthly repayments
and so your Executors will need to agree with the bank or building society the placing on
hold of these until probate is granted or whether other arrangements can be made for payment
meanwhile.
You’ll also need to consider details of utilities etc, all of which will have to be notified.
