For many people in today’s world, waiting until you are in a committed relationship before buying property together can be unpredictable. Buying a property alone can also be expensive and overwhelming so as more siblings buy their first house together, the trend continues that friends are also pooling their home deposit and buying property.
Given the divorce rates, buying a property with your best friend may be the best option for you to get into the property market.
There are however some things to consider before you take the leap, to protect you both and to make sure that whatever happens, the property does not get in the way of your friendship, or your individual futures.
Rent a Property With Your Friend
If you both plan to live in the home you buy together, then you should at least try to live together for a while first. Even the closest of friendships have been torn apart over unwashed dishes and unmatched expectations. Why not move into a furnished apartment on a 6-month lease as a test run?
Travel is a great way to discover a new level of friendship, as both of you are put into various pressure situations. A week in a foreign environment, sharing a room and having to budget spending, and plan activities together, tests all the essential components of a friendship – patience, selflessness and, most of all, expectations.
Assess Your Friend’s Financial Situation
Buying a property with a friend is a big financial commitment, not only because of the decades of monthly repayments, but also the responsibility for the ongoing expenses involved in running and maintaining the property. You and your friend should spend some time going over your finances, being as honest and open as possible about your own expenses, spending, savings and debts. This will give a true picture of each of your financial strengths and weaknesses.
Drawing up individual budgets is a good exercise to learn exactly where your money goes. Knowing each other for what seems like forever, does not mean you have any idea about what each of you does with your money. Discuss what your current budgets are and how they will have to change to manage the new expenses. It’s important you both understand the commitments of buying a house with a friend.
Decide on Responsibilities with your Friend
Once you’ve decided that you can buy a house together, it’s important to plan ahead and have a clear understanding of what you both want and what your individual responsibilities may be. If one of your longer-term goals is to be in a relationship and start a family, then it’s safe to assume that will happen during the course of your mortgage.
You’ll also need to consider who is responsible for what as a property needs to be regularly maintained. Decide prior to buying a house with a friend who will be in charge of calling tradespeople? Sit down and discuss Who will take care of the garden? Who will go to the body corporate meetings? All of these ‘responsibilities’ need to be considered and allocated in advance to avoid confusions and resentment in the future.
Property Co-Ownership Legal Considerations
It is important that both of you meet with a solicitor to help draft up a co-ownership agreement. This should clearly detail what happens if your friend can’t pay the mortgage, wants to sell their share in the property, if the relationship deteriorates or there is a death. Other considerations when buying a house with a friend includes updating your wills.
You may need to set up a joint bank account for expenses, outsourcing maintenance and putting direct debits in place for mortgage and bill payments.
Buying a property with your best friend can be a fantastic experience - if managed well. It’s important to protect both of your personal and financial futures however and know also that the future is largely unpredictable. With precautions in place that anticipate most scenarios, you will both be able to reap the benefits of your shared property investment, and experience a deeper level of friendship as you enter into a new kind of partnership together.