The pro's and con's to buying property with friends
As many people are struggling to get their foot on the property ladder, more people are deciding to invest in property with friends or family. There are a number of advantages to this, but there are also some disadvantages. Before you make any decisions you should consider if this is the best thing to do. The first thing you should do is sit down with your investment partner and make sure that you both agree on what it is you want, discuss how you are going to finance buying a home, how long you intend to live together for and what should happen if one of you wanted to move out and sell their half of the house. You should also ensure, regardless of how good friends you are, that all the correct legal documentation is in place, this could include a co-habitation agreement or a declaration of trust, make sure that you are both happy with the contents before signing anything as this is a legally binding contract. The advantages to joint ownership:The main advantage to buying a home with someone else is the share of costs. You will save on a number of things, including but not limited to:• The initial deposit you need to put down on the property• Fees involved with buying a property, such as survey costs, legal fees and stamp duty charges.• Mortgage: the monthly payments along with the fees involve in setting up the mortgage will be jointly shared. • Any repairs or decoration required along with general on-going maintenance. This includes furniture for shared rooms, carpets, curtains etc. • Utility bills will be shared, unless otherwise agreed, thing like the electricity, gas, water, telephone, television licence etc. will all be shared. Another advantage to buying with a friend is that the property is an investment, which can be used for your future. Even if you choose to move out after a few years, you can rent out your room and retain the property until you have paid the mortgage or choose to sell the house. The disadvantages to joint ownership:Buying with friends can be difficult, you need to ensure you keep record of everything that has been paid out and by whom to ensure that you are always on a level footing, whilst you want to retain your friendship and not get pedantic about £20 here and there, you need to protect your investment. You and your partner need to agree to be open about your finances, if one of you were to default on a mortgage payment, it would reflect on both of your credit reports. If you are ever concerned that you may not be able to pay the mortgage payment that month you need to discuss it immediately to ensure you do not default, consider having a ‘rainy day’ fund in place.It is not as easy to sell up and move on. If you decide to buy a property by yourself but your partner wants to stay in the house you’ve bought together and cannot afford to buy you out you may feel trapped. This may force you into becoming a landlord and renting out your room, taking on a role you do not want. Buying a property with a friend or a relative can be very stressful, you will argue over things, and if you cannot see eye to eye it can cause damage to your relationship, to the point where after you have sold the property you no longer keep in touch. To prevent this from happening always be open and honest and considerate of one another.