Buying a property with others
Why buying with others can be a good idea
Pool your resources with friends or family and you may be able to boost your spending power. Don't get carried away though, buying a house together is a business deal and you'll need to have all your arrangements formalised by a solicitor so everyone understands exactly what's expected of them.
Please also remember that if one of you defaults on your payments, the other purchasers will be liable for the outstanding amount, and this may affect your credit rating.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Entering into an agreement
There are two types of legally binding agreements available for groups buying together:
Joint tenancy agreements
These are particularly appropriate if you're in a stable cohabiting relationship.
The property is owned in equal shares, including any profit made when you sell it. If one of the joint tenants dies, his or her interest in the land passes automatically to the other.
Your share of the property can't be transferred under will or intestacy.
Tenancy in common
This agreement is particularly appropriate for buyers who are friends or family, or are contributing unequal amounts to the purchase price. Each purchaser holds a fixed share of the property, which may or may not be equal. Your share can be transferred under will or intestacy.
Something to consider is that if one person moves out and the others decide to buy their share, they may be liable for stamp duty on the full value of the property.
Other options to consider
If you don't want to live with friends or family, there are other ways that can help your property dreams become a reality.
- Shared equity: many new-build developers offer shared-equity schemes where they retain a share in the property (by means of a second charge) meaning that you only have to raise a mortgage and personal deposit for the remainder, typically 75% of the purchase price. Many new-build developers offer the Government’s shared equity scheme, which is called Homebuy Direct.
- Shared Ownership: if you can't afford to buy your own home, Shared Ownership schemes may allow you to buy a property with a Housing Association. You pay a mortgage on your share of the property and pay rent to the Housing Association for their share.