Buying a property with a friend, partner or family member can have a number of benefits such as reducing the amount that an individual needs to save for a home loan deposit and providing a higher budget to work with in a competitive market.
Most people think of established couples when they think of joint property ownership, but in truth it is becoming increasingly common to see people buying homes with friends to get their foot in the door of the property market.
Buying a property with someone can be profitable for all parties, but there are a number of things to be considered, such as whether you will both be living at the property and how you will split repayments and bills.
You also need to consider the reliability of the other person you plan to buy with, because if they don’t make repayments then you may end up liable.
Another consideration is whether you should sign a Joint Tenancy or a Tenancy in Common:
- In a Joint Tenant arrangement if one party dies, then the joint tenant automatically owns the property even if a will says otherwise. This type of arrangement is generally suited to those in a close relationship.
- A Tenancy in Common works a bit differently. In this type of agreement, if someone where to pass away, their share would be inherited by whoever is named in their will. Each owner in a Tenancy in common can also hold smaller or larger shares of a property (it doesn’t need to be 50/50), and transact on their share independently.
A Tenancy in Common is generally recommended for those in a business arrangement, or for friends, looking for options to get into the property market for a lower price.
There are plenty of people who have benefitted from buying with others, however before you purchase a property with another person you should always gain advice from legal and financial experts to make sure that each party can meet their obligations and that everyone is getting involved in a situation that is in their best interests.
What do you think? Would you buy a property with your friends to get into the property market sooner?