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So, you want to buy a property with a friend or loved one…

Date online: 22/07/2015

Joint ownership isn’t for everyone, and each person should make their own judgment whether to enter an agreement with a third party. To help you make your own decision we have put together a list of Pros and Cons of buying property with one or more other people.

Pros

Shared deposit – a shared deposit means that you may be able to afford a property sooner as you wouldn’t need to save as much as if you were purchasing individually.

Larger mortgage – having more financial input can mean that you’re able to get a larger property in a more desirable location.

Shared legal costs – buying a property can incur hefty solicitor fees. Sharing these costs can be a great help.

Shared payments – sharing the costs of monthly mortgage payments sometimes means that the repayment schedule can be shortened or interest rates reduced.

Shared maintenance costs – all bills and decorating costs can be split meaning that when there is an unexpected cost it isn’t so harsh on your bank account.

 Formal agreement   - a formal deed and agreement means that joint owners can resolve disputes far more easily as there are clear procedures and a clear definition of responsibilities should all parties come to a disagreement. It can also outline how any profits can be split following the sale of the property and avoids any confusion or hard feelings. If each of the owners has contributed a disproportionate amount of capital towards the property a declaration of trust can be drawn up a solicitor, in which each of the owners are held as Tenants In Common.

Cons

Disagreements – there is the possibility of any number of disagreements when sharing ownership, most commonly that one party may want to sell their share of the house before the other parties are ready to move on.

Financial complications - working out who pays for what can become complicated, especially if one party paid more deposit. Splitting any profits can also be a contentious point and could easily ruin a relationship. This is why declaration of trust documents are so important.  
Added legal costs – the formal deed and agreement required when co-buying a property would need to be drafted by a solicitor and is an additional cost.

There are various procedures you must go through when purchasing a property with one more other people. It is important to seek the advice of both legal and financial professionals in order to minimise risks.

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