A friend and I are keen to get on the property ladder but can’t afford to individually. Consequently we’re toying with the idea of a joint venture – buying a two bed to share. Do you think this is a good idea?
Dear Friendly Buyer,
Buying with a friend is becoming increasingly popular as prices have continued to rise.
If you’re going to invest together, you should always make sure you have the appropriate agreements set up in advance.
This means having very open and frank discussions about what you all want to get out of the venture, how you plan to fund the investment, how long you plan to live together and what happens if one of you wants to sell their share in the future.
It is not recommended that you purchase a property with friends without the correct documents or without drawing up some sort of declaration of trust, or a co-habitation agreement, between all parties.
Legally the best way to make a purchase is as tenants in common. This means you can each own a different share of the property, won’t automatically inherit the property if the other tenant dies and can choose who to leave your share to in your will.
It’s also important to trust and like the person you are buying with. Don’t be hasty.
There are plenty of advantages of buying a property with friends, but the main one is that it reduces the individual financial burden that home ownership can exert.
Getting on the ladder in this way is creating an investment for your own future.
When you are all ready to sell the property, you may well have made enough money to invest in your own home.
Buying with friends can be a very successful way of getting onto the property ladder, however the pitfalls can be considerable if proper care is not taken.
The upside is an investment that increases in value as well as a home to live in and friends to enjoy it with. Proceed, but with your eyes open.
Dawn Sandoval is the owner of Dawn Sandoval Residential in Canary Wharf
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