It can be a good way of taking the first step on the property ladder as long as everyone understands what is involved and there is a legally binding agreement that is fair to everyone.
It can be tempting for friends to be informal about their relationship, but circumstances change and so it is wise to decide in advance what should happen if someone wants to move or sell their share of the house in future.
One approach is to draw up a co-ownership contract which sets out the nature of the agreement and how things should be handled if circumstances change.
For example, joint buyers may want to consider what happens if one of them loses their job and can no longer pay their share of the mortgage.
There are other points to consider such as what happens if one person needs to sell their share. How should that share be valued? How much notice should the seller have to give before leaving? How much say should the remaining parties have over who is allowed to buy the share?
There are also questions as to how mortgage payments should be paid. Does each part-owner pay individually or should there be a joint bank account?
Most of these points are quite straightforward but it is far better to deal with them at the outset rather than wait until issues arise a few years down the line. By that time, the nature of the friendship may have changed and problems may be more difficult to resolve.
Many people have successfully bought homes with friends so it can be a good way to get on the property ladder, but it’s important to get legal advice and ensure each person’s interests are properly protected.
Please contact us if you would like more information about the issues raised in this article or any aspect of buying and selling a property.
