As house prices continue to rise and the market becomes ever more competitive due to stock shortages, many people are considering buying a home with friends to get on the property ladder. In fact, a recent survey found that 10% of Brits aged 18-24 have bought a home with friends.
Ross Counsell, chartered surveyor and director at regulated property buyers, GoodMove, has pulled together tips on everything you need to know about buying a home with friends.
Main things to consider:
Buying a home with friends has many advantages, for example, it makes it easier to get on the property ladder and acquire a mortgage than if you were buying alone, especially if you buy with more than one friend. Buying a property with a friend doesn’t mean you necessarily have to live there either, as you can buy together and rent to tenants for further income.
But it has its drawbacks too. Buying a home with a friend can put a strain on your relationship, and you need to be completely honest about your financial situation before buying together. If you or your friend’s financial circumstances change and you’re struggling to make payments, this can put a strain on your relationship. Your friend may also want to move out earlier to live with a partner or by themselves, so you need to ensure you have spoken about long-term goals to ensure you’re on the same page.
It’s also important to consider ownership structure when buying a home with friends. This refers to the steps you need to take if one of you chooses to sell in the future.
Most people buying with friends will opt to be named tenants in common; this means you both own a partial share of the property rather than an equal share. You can individually sell, give away, or re-mortgage all or part of your shares without permission, and gives you more flexibility if one person wants to move out later on.
The other option is a joint tenancy agreement, where you both equally own the whole property. This means any sale or re-mortgaging of the home needs to be agreed upon by all tenants so it can be more difficult moving out later on.
Top tips to consider when buying a home with friends:
1. Get organised
As with buying a home with anyone, buying a home with a friend involves a lot of paperwork so you need to be organised with what’s involved when buying a home. It’s also a good idea to open a joint bank account to make house payments from and ensure that your personal finances are kept separate.
2. Establish house rules
When you buy a home with a friend, it’s a good idea to set boundaries and house rules. For example, having friends or partners over or whose responsibility it is to do chores. Living together with a friend is a different dynamic than living with a partner, family member, or alone, so it’s important to set rules to ensure both parties feel respected and listened to.
3. Consider renting together first
I would always recommend living with somebody first before committing to buying a home together, so it is a good idea to rent together first before buying. Even the best of friends struggle to live together, so living together first allows you to get used to each other’s habits and personalities before making a more permanent decision.
Speaking about living with a friend, Ellie, aged 26 from Leeds says: “I bought a home with my friend last year because I didn’t want to rent anymore but wasn’t in the position to buy by myself or with a partner. So far, it’s been great and I’ve enjoyed living with her, thankfully our interior tastes are the same and we’ve had no issues with the financial side of things either. I do worry about her wanting to move out soon as she has recently got a new boyfriend, but I know we have enough respect for each other to work something out fairly.”
Ross concludes: “We know how hard it can be for young people to get on the property ladder in today’s current climate, which is why many are turning to live with their friends. We hope this guide helps anyone looking to buy with a friend understand the ins and outs of the process and help make the right decision for them.”