In this article, you will be equipped with knowledge on the differences between Joint Tenancy and Tenancy in Common. With this knowledge, you would be able to make sound judgments on which you should choose when you purchase a property with a co-owner/s.
Making an informed decision on the choice of tenancy is crucial at the point of purchase as this may affect any future housing plans, such as decoupling. It also takes a great deal to change the manner of holding that comes with monetary cost.
1. Differences between Joint Tenancy and Tenancy in Common
First, let’s start off by distinguishing between the two key types of tenancy agreements in Singapore:
- Joint Tenancy
- Tenancy in Common
In Singapore, it is mandatory for you to have a tenancy agreement when you purchase property. You will be given the option to decide on at the point of purchase. This will then be lodged with the Singapore Land Authority (SLA) registry.
Under a Joint Tenancy agreement, co-owners can hold the entire interest in the property together. It does not take into consideration the contribution of each party.
Right of Survivorship applies in a Joint Tenancy. Upon the demise of a co-owner, his/her interest in the property would automatically be passed on to his/her other co-owners despite provisions in his/her will.
Here’s an example.
Mr. and Mrs. Tan own a property under a joint tenancy. Mr. Tan passed away and left a will stating that his share will be passed on to his son. Despite the will, the right of survivorship will supersede the will. This would mean that the ownership of the property will then pass to Mrs. Tan instead of his son.
This makes Joint Tenancy a more popular option for couples who want to buy a matrimonial home to live in for the rest of their lives. The right of survivorship will ensure that if any demise of one of the co-owners, the property would be vested in the surviving co-owner, even without a will.
Tenancy in Common
Under the Land Titles Act, it is presumed that each co-owner holds a distinct number of shares in the flat. This can be in the percentage of, 30% – 70% or even 1%- 99%., of course it can be of other unequal shares.
Unlike joint tenancy, right of survivorship does not apply for tenancy in common, as each owner has a distinct number of shares. Should one of the property owners die, his or her shares will be distributed according to their will, or the Intestate Succession Act (if the owner didn’t write a will).
Tenancy in Common would be ideal for property owners who are buying for investment or couples who have intention to purchase another property in near future.
Here’s an example.
A couple who is purchasing their first home together but would require both income to take a loan from the bank. However, they have the intention to purchase another property to house their aged parents. Hence, for them to each own one property in future, they can choose to go for Tenancy in Common with unequal shares of 99%:1% (can be another unequal percentage), this is for the ease of decoupling. Which will be explained in the later part of the article.
2. How the manner of holding can be changed for both public and private property
To change your manner of holding from a tenancy in common to a joint tenancy, co-owners must first ensure that everyone holds an equal share ratio, or the change will not be approved.
a) Public Property (HDB)
For HDB flat owners, you are allowed to change the holding type of your flat, by either appointing your own solicitors or engaging HDB to handle the transaction.
You are allowed to change the proportion of shares held by each co-owner without any monetary consideration if already under a tenancy in common.
b) Private Property
Conversion of tenancy will be lodged and registered with the Singapore Land Authority
Existing owners will sign an Instrument of Declaration before a Commissioner for Oaths stating their intention for change of manner of holding
Conversion of tenancy may be subject to stamp duties
3. What is decoupling and why?
Here’s why to decouple – If you already own a residential property with your spouse and you would like to purchase a second property, you will incur higher tax on the second property that is called the Additional Buyer’s Stamp Duty (ABSD). So as to avoid paying the additional tax, a decoupling on the first property can be done.
Decoupling allows couples to remove one spouse from the ownership of the first property, making him/her the sole owner. After decoupling has occurred, the spouse who no longer has ownership on any property can purchase a property without incurring any Additional Buyer’s Stamp Duty. This is why many couples who have the intention to purchase another property in future will choose to go for tenancy in common rather than joint tenancy.
4. Where can I check my tenancy?
For private property owners, you can check your manner of holding here at a price of S$5.25.
For HDB flat owners, your manner of holding can be found at no fee after logging in here.
Joint Tenancy and Tenancy In Common – which is better?
Both Joint Tenancy and Tenancy in Common have their individual pros and cons. Before deciding, be sure to think about your future portfolio plans and discuss with a professional mortgage advisor on your best interests.