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Co-buying a property with friends or family.

Could co-buying help you onto the housing ladder?

By Eitan Fox  //  Mon 10th February 2020
Co-buying involves up to four friends or family members investing in a property together. The main advantage is that you can buy a stake in a home sooner, rather than later, saving money which would have gone on rent.
Could co-buying help you onto the housing ladder?

If you’re struggling to afford the deposit on your first home, joining up with friends in the same position could bring home ownership within your grasp, but you should be aware of the pros, cons and legal implications before you start.

Co-buying involves up to four friends or family members investing in a property together. The main advantage is that you can buy a stake in a home sooner, rather than later, saving money which would have gone on rent. It could also mean you can buy in a pricier area than you’d otherwise be able to afford. As well as the cost of the deposit, you would spread professional fees and charges among the buyers too.

Writing in What Mortgage, Simon Nosworthy, from London law firm Osbornes Law, explained: “For many young people getting on the property ladder is just a dream, with spiralling house prices making it impossible for many to buy a home. As a result, more and more are pooling their financial resources with friends to co-buy a property.”

One thing to consider when buying with others is that you are all liable to meet the monthly mortgage payments. So, if one co-buyer loses their job, the others would still need to cover their repayments.

Issues also occur if one buyer wishes to move out and take their share with them. The remaining buyers would either need to find the funds to buy out their friend, remortgage or sell the property. If the home has risen in value, you may struggle to agree on a figure which reflects this.

According to Simon Nosworthy, the important thing is to have a trust deed drawn up before you commit to co-buying. “This sets out the size of the deposit paid by each co-buyer; who owns what equity going forward; who pays what [share] of the mortgage; the procedures for leaving the co-ownership arrangement and what happens if everyone decides to sell and the financial split on completion of sale.”

Co-buying probably won’t be a long-term arrangement. If you are moving in with friends, it is likely that at least some of the buyers will wish to move out and settle down with a partner. However, it can be a more stable and affordable option than renting and is worth considering as a way onto the housing ladder.

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