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NAEA President on what to consider when buying property with friends

PUBLISHED: 12:01 02 March 2015 | UPDATED: 15:31 05 March 2015

What to consider when buying property with friends

What to consider when buying property with friends

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My friend and I are thinking of buying a property together. What should we consider before making such a move?

Purchasing a home in North and North West London is likely to require paying a minimum of between £200,000 and £250,000. With the associated costs and income required to obtain a mortgage, buying with a friend or family member may be for some the only way to get a foot onto the housing ladder.

However the decision to buy with another has to be taken objectively. Buying jointly requires a lot of trust, transparency and above all good planning. For anyone considering a joint ownership arrangement, I would recommend the following:

1. Have realistic expectations

It is important to remember that circumstances like jobs, relationships and family can change, so be honest about your reasons for buying together. It should be treated as dispassionately as possible, and the purchase should be treated as an investment move for both parties. Before buying agree a timeframe to re-evaluate your situation.

2. What’s the worst that could happen?

One of the benefits of buying with longstanding friends or family should be an inherent level of mutual trust. However, this doesn’t mean it isn’t worth consulting lawyers about a legally binding co-ownership contract and agreeing in advance what will happen if one owner’s circumstances change. Too often not doing so ends in the break-up of a long standing friendship. Agree how the deposit contributions will be repaid as well as any profit will be split when the property is sold.

3. Always leave a paper trail

All paperwork relating to the property or mortgage must be in the names of the co-buyers. Remember to get any agreements written down, especially if the parties are not contributing evenly. Making copies of all documents associated with the purchase is a good idea as it allows them to be readily accessible to both parties and ensures there is always a record of joint decisions. Remember to treat decisions about the property as business transactions. Regardless of who you buy with, confirm important agreements are recorded in writing.

4. Don’t forget who owns the TV!

Drawing up a comprehensive inventory of non-shared items or other costs, and keeping a note of who pays for things at the start of the transaction can reduce confusion down the line.

Set a realistic timeframe – If you are buying with a friend it is likely that the relationship is, ultimately, temporary. For this reason, co-ownership should always be treated as an investment decision and buying a property with a good potential of capital growth makes sound business sense.


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