First time buyers Guide

Buying Property with a Friend or Family Member

Buying a property with a friend, partner, brother or sister is not a new concept but it is on the increase. It is known as joint ownership.

Many people view joint ownership as a realistic way of enabling them to invest in their own property and escape the rental trap.  It can mean that you are able to buy a bigger or nicer property in a better area, perhaps even ‘leap-frogging’ the bottom rung of the property ladder altogether.

and suitable mortgage provider.  It’s important to remember, however, that as individuals, each member of the group is responsible for 100% of the mortgage.  For this reason all those involved should take out insurance to protect themselves in the event of one of the group, for whatever reason, being unable to meet their monthly mortgage payment.

Legally there are two types of joint ownership; the first, which is commonly used by married couples, is ‘joint tenancy’ (the terminology can be a little confusing and does not mean a lease or tenancy arrangement).  Under this agreement a couple are entitled to half a share of the property irrespective of any financial contribution.  In the event of one partner dying their share in the property will usually automatically pass to the other.  If you are buying a property as a group, ‘tenancy in common’ is considered to be the most appropriate type of ownership, as each person can own a definite share in the property.  Under this type of arrangement you are able to specify in a will who your share of the property should pass to in the event of your death.  These arrangements should be laid out formally in a ‘declaration of trust’ or ‘trust deed’ drawn up with a solicitor.  A record of each person’s monthly contribution to the mortgage and other regular payments will need to be kept in order to decide the equity split upon sale of the property.

When it comes to living under the same roof with friends, colleagues, or even members of your own family, no matter how well you get on, tensions may arise from time to time.  To help smooth the way joint owners are encouraged to draw up a co-habitation agreement which lays out some basic ‘rules for living’.  This agreement can include anything from whether pets should be allowed to moving in a partner.  Being aware of potential areas of friction at the outset and drawing them up into a legal document with an experienced solicitor could save considerable heartache and thousands of pounds.

Parents can also jointly own a property with their children as a way of helping them onto the property ladder. Alternatively they can apply for a joint mortgage without the parent even being on the title deeds.

Another trend is for first time buyers to find co-investors through on-line introduction agencies.

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