How to buy a property with a partner, relative or friend

One option for first-home buyers wanting to get on the property ladder is to rentvest. Another option is to buy your own home in conjunction with someone else, which makes it easier to save a larger deposit in less time.

There are two different ownership structures you can choose from – joint tenants and tenants in common.

Joint tenancy is often used by romantic partners. Under this arrangement, you and your co-buyer own 50% of the property. If one of you dies, the other person automatically inherits their share in the property.

Tenants in common, which is often used by relatives and friends, is more of a business arrangement. With this structure, you can have unequal ownership stakes – for example, one person might own 70% and the other 30%. Also, if one of you dies, they can leave their share to whoever they want, whether that's the other co-owner or an outside party.

Pros and cons of co-ownership

The biggest benefit of co-ownership is that you could potentially, more or less, double your deposit and borrowing capacity. This could allow you to enter the market sooner and buy a better home.

Another potential benefit is the companionship that comes from living with someone close to you.

However, there are several potential downsides.

First, depending on your lender, you might find yourself legally liable for the other person’s mortgage if they stop making their repayments. In that case, if you were unwilling or unable to step in and cover their repayments, the lender might seize and sell your property to recover its debts.

Second, if the relationship between you and your co-owner deteriorates, you could be forced to live with someone you dislike, buy out the other person’s stake, sell your stake to them and move out or make other arrangements.

Third, if you have a tenants in common arrangement and your co-owner dies, you’ll suddenly find yourself with a new co-owner (i.e. the deceased person’s beneficiary) – who you may or may not agree with. 

Get professional advice

Co-ownership can work well under the right circumstances, but also carries risk. That’s why if you are planning to go down this path, it is a good idea to get legal advice.