As Australian property prices continue their climb into 2025, more buyers are exploring creative ways to enter the market. Among the most flexible and increasingly popular structures is ‘tenants in common’—an arrangement that allows two or more people to co-own a property in individually defined shares. Whether you’re an investor, part of a blended family, or simply looking to pool resources with friends, understanding the intricacies of tenants in common could make all the difference in your property journey.
What Does ‘Tenants in Common’ Actually Mean?
Unlike the more traditional ‘joint tenancy’, where all owners have equal rights and the property automatically passes to the surviving co-owner(s) upon death, tenants in common allows each party to own a specific share of the property. These shares can be equal or unequal—think 50/50, 70/30, or any split agreed upon. Each owner can sell, transfer, or will their share independently.
For example, three siblings might buy a Sydney apartment together, with one owning 60% and the others 20% each. If one sibling passes away, their share can be left to anyone—children, a spouse, or even an unrelated third party—rather than defaulting to the other co-owners.
- Flexible ownership percentages: Customise your share to reflect your investment.
- Estate planning control: Each owner can pass on their share as they wish.
- Mixed-use potential: Useful for investment properties or mixed residential/commercial holdings.
Why Tenants in Common is Trending in 2025
The current financial climate—characterised by elevated interest rates and tighter lending criteria—has seen a surge in group buying and non-traditional property arrangements. According to CoreLogic, co-ownership models now make up a growing segment of new property purchases, particularly in high-demand urban centres and regional hubs.
Recent 2025 policy updates have further shaped this trend:
- NSW and Victoria’s digital title reforms have streamlined the registration and transfer process for tenants in common arrangements, reducing paperwork and wait times.
- ATO guidance on CGT and land tax: The Australian Taxation Office clarified that each tenant in common is assessed separately for capital gains tax (CGT) and land tax, which can enable tailored tax planning strategies.
- First Home Guarantee expansion: Some lenders now allow co-borrowers who are not spouses or partners, provided the structure is tenants in common, making it easier for friends or family members to combine resources.
These changes have made the tenants in common structure more accessible and attractive for both first-time buyers and seasoned investors seeking flexibility and asset protection.
The Pros, Cons, and Legal Nuances
While tenants in common offers clear advantages, it’s not without risks and complexity. Here’s what to weigh before diving in:
- Pro: Tailored ownership and exit strategies. Each party can sell or transfer their share without needing unanimous consent (though a co-ownership agreement is highly recommended to manage disputes).
- Pro: Ideal for blended families or investment syndicates. Allows separate financial arrangements and estate planning.
- Con: Potential for conflict. Disagreements can arise over property use, maintenance, or sale, especially if there’s no formal agreement.
- Con: Financing hurdles. Not all lenders are equally comfortable with tenants in common, and cross-collateralisation risks can arise if one party defaults.
- Con: Tax complexity. Each owner is responsible for declaring their share of income, expenses, and capital gains—requiring diligent record-keeping.
Legal tip for 2025: With the Property Law Act amendments now in effect in several states, co-owners have stronger recourse for dispute resolution but may also face stricter disclosure obligations at purchase. Engaging a solicitor to draft a clear co-ownership agreement is more crucial than ever.
Real-World Example: Friends Pooling for a Melbourne Investment
Consider three friends who want to buy a townhouse in Brunswick, Melbourne. Under a tenants in common arrangement, they split ownership 50/30/20 based on their individual contributions. Each pays their share of the deposit and mortgage, and rental income is divided accordingly. If one decides to move overseas in two years, they can sell their 20% share—potentially to a new investor or even back to the other co-owners—without forcing a sale of the entire property. With the new digital title processes in Victoria, this transfer is now more efficient than ever.
Making the Structure Work for You
Tenants in common is reshaping how Australians approach property, offering new pathways for those priced out of solo ownership or seeking strategic investments. The key is clarity: define each party’s rights and responsibilities from the start, stay on top of tax and legal obligations, and regularly review your agreement as circumstances change. With the right planning, tenants in common can unlock doors to the property market that might otherwise stay closed.