Declaration of Trust: What It Is & When You Need One
When two or more people buy property together but contribute different amounts, a declaration of trust protects each person's share. Without one, disputes over who owns what can be costly and difficult to resolve.
Key Points
A declaration of trust is a legal document that records each party's share in a jointly owned property
Essential when co-owners contribute different deposit amounts, or one party has a greater share
Drawn up by a solicitor — typical cost £150–£500
Used by tenants in common; joint tenants hold equal shares and don't need one (but can still have one)
Protects gifted deposits from parents or third parties
Can specify what happens to each person's share if the relationship ends or one person wants to sell
What Is a Declaration of Trust?
A declaration of trust (also called a deed of trust or trust deed) is a legally binding document that sets out the beneficial interests in a property. In plain terms: it records who owns what percentage of a property, and what happens to each person's share in various scenarios.
It's most commonly used when two people buy a property together but contribute different amounts — for example, one person puts in a larger deposit, one has a higher income, or one receives a gifted deposit from a parent that needs to be ring-fenced.
Joint Tenants vs Tenants in Common
Before understanding declarations of trust, it helps to know the two ways you can legally co-own property in England and Wales:
Feature
Joint Tenants
Tenants in Common
Ownership shares
Equal (50/50)
Specified (e.g. 60/40, 70/30)
Right of survivorship
Yes — other owner inherits automatically
No — share passes via will or intestacy
Declaration of trust needed?
Usually not (shares are equal)
Yes — strongly recommended
Can sell their share independently?
No
Yes (subject to restrictions)
When Do You Need a Declaration of Trust?
You should consider a declaration of trust in any of the following situations:
Unequal deposits: One buyer puts in more than the other (e.g. £50,000 vs £10,000)
Gifted deposit from a parent: To protect the parent's gift as a ring-fenced contribution
Cohabiting couples (not married): No automatic legal protections if you split up
Investment property with a friend or business partner: To clarify ownership split and exit rights
One partner paying more of the mortgage: To reflect ongoing unequal contributions
Shared ownership: To record the split between staircasing shares
What Should a Declaration of Trust Include?
A well-drafted declaration of trust should cover:
The names of all property owners and their beneficial interest (e.g. 60% and 40%)
The initial capital contributions made by each party (deposits, costs paid)
How the proceeds will be split if the property is sold
What happens if one party wants to buy the other out
Whether one party can force a sale (and under what conditions)
How ongoing mortgage payments, repairs, and improvements affect each party's share (if applicable)
Most conveyancing solicitors can prepare a declaration of trust at the same time as handling your purchase, which can save time and sometimes cost. Always use a qualified solicitor — a poorly drafted deed may not protect you if a dispute arises.
Can a Declaration of Trust Be Changed?
Yes — a declaration of trust can be updated if all parties agree. This might be necessary if the ownership split changes (e.g. one party pays off a larger portion of the mortgage over time), or if one partner buys out the other's share. Any amendments must be formally documented by a solicitor.
Frequently Asked Questions
Is a declaration of trust legally binding?
Yes — when properly drafted and signed by all parties, a declaration of trust is a legally binding document. Courts will generally uphold it in disputes over property ownership, provided it was freely entered into and represents the parties' true intentions.
Do I need a declaration of trust if I'm joint tenants?
Joint tenants hold equal shares by definition, so a declaration of trust is less necessary. However, if you made unequal contributions (e.g. different deposits), you may still want one to record those contributions — and you may want to sever the joint tenancy and become tenants in common instead.
Does a declaration of trust need to be registered at HMRC?
Not automatically. However, HMRC Form 17 must be submitted if you're changing the income split for tax purposes on a property you jointly own. A solicitor can advise on whether any HMRC notification is required in your specific situation.
Can a parent use a declaration of trust to protect a gifted deposit?
Yes — a declaration of trust can record that a parent's contribution is a loan or a ring-fenced beneficial interest, not a pure gift. This means if the property is sold or the relationship breaks down, the parent's contribution can be returned before the remaining equity is split. Many mortgage lenders will ask whether any gifted deposits involve a repayment obligation, so seek legal advice.