Property

Is it a good idea to buy with friends?
‘The great thing about joint ownership like this is that you can make your money go a lot further. You canshare a deposit and borrow more, perhaps enabling you to buy a better property or in a better area.’

What are the downsides?
‘There is always a risk that circumstances might change: someone might get engaged, lose their job or even die. It’s important you put measures in place to protect your investment in the event of any possible significant event and decide beforehand how you will react to it. It’s best if you can go into the venture on an equal footing and view it is as a business arrangement.’

How many types of joint ownership are there?
‘ “Joint tenancy” is usually for people who have made a lifetime commitment to each other, such as getting married. Friends or co-buyers buying together should opt to be “tenants in common”. This has nothing to do with renting; it means that in the event of one of the co-owners dying their share of the property is not automatically handed over to the other owner(s).’

What legal documents need to be drawn up?
‘When you buy a property together, your shares should be set out in a “declaration of trust” or “trust deed”. How you each invest in the mortgage and property over the period of joint ownership should be set out in records you keep as you go along. You should draw up a
co-habitation agreement to set down what you agree to do if someone moves out temporarily, which will cover questions like, “Can the room be rented out in order to cover mortgage payments?”; “Who will choose the lodger?”, “Who pays what costs?” You will also need to draw up wills and you may also choose to take out mortgage protection insurance.’

How do we work out who has what share in the property?
‘Things are much simpler if you all contribute equally to the deposit, mortgage and upkeep, even if one person’s borrowing power is bigger than the others. Inequality can lead to friction. If not, keep a record of who put what in at the outset and, upon sale, return the deposit and
then split the proceeds proportionately.’

And if we all fall out and want to sell?
‘It’s absolutely imperative that these issues are discussed before you invest together so you know what to do in the event of a fall-out – or if one person can’t keep up payments. Breaking a proper agreement leads to litigation, or even court – avoid this at all costs.’

Useful references
First Rung (www.firstrungnow.com); Mortgage Angels (www.mortgageangels.co.uk); Britannia Building Society does a mortgage specifically designed for friends buying together (080 0013 1140/www.britannia.co.uk); Go Direct explains mortgages and insurance (www.godirect.co.uk); The Law Society will help you find a local solicitor (www.lawsociety.org.uk).