Buying a home with friends
Sometimes you can’t afford a home on your own. Lucky for you, you don’t need to be in a relationship to own or rent a property, a friend will do.
Here are what your options are and what to expect.
Can You Really Buy A Home with Friends?
People who can’t afford to buy a home tend to rent usually with a number of house/flat mates. It works out cheaper as you can split the costs, but it can have its disadvantages. Renting can be more expensive than repaying a mortgage. Also, money on rent disappears, money in a mortgage is investing in your home.
Fortunately, there are options to home ownership, joint tenancy and tenants in common. Joint tenancy is the way couples tend to go. Whereas a home share arrangement is better with tenants in common.
This is the most common form of home ownership. Under joint tenancy, you can both own the whole property together. However, it doesn’t mean you both own half each. It means that you both have equal claim on the property even if one of you has never paid anything towards it.
This means if one joint tenant passes away, the entire property would go to the surviving tenant. If the joint tenants are not married or in a civil partnership, it may end up in an inheritance tax bill.
This could also mean that one tenant can sell the property without the other knowing, as joint tenants act as one in the eyes of the law. Determining who owns what in court can be very costly.
Which means Joint tenancy probably isn’t the best choice unless you’re in a long term, highly stable relationship with the other buyer.
Tenants in Common
Up to four people, including couples can buy a home together as tenants in common. Each person has their own share of the property which is defined at the outset. If it were a couple for example it would be split 50/50, but in most cases the share may be divided based on the partners contribution – with four people it could be split 25%.
This can be the perfect way to get on the property ladder affordably without needing to be with someone. If anyone wants to move out, they can either sell their share or one of the remaining tenants can buy them out.
Finally, here are some tips for buying a home with friends:
- It’s better to buy with people you have previously lived with before, so you know you’ll get on.
- If you haven’t lived together before, make sure you have discussed a plan and have created a set of house rules.
- Have a legal agreement setup, these set out responsibilities and liabilities in different circumstances – this can also cover selling arrangements.
- A disaster plan is a good idea as well – this is a plan you have in place if someone passes away.
We hope these tips have given you a small insight into buying property with friends.
If you are currently looking for a new home, you can view our current listing here.