However, more and more people are buying property together with friends, siblings or other family members, sharing the responsibility of building a deposit and meeting the mortgage payments. So is buying a house with friends a practical move, or a recipe for potential disaster?
Why it’s a good idea
There can be many advantages to buying a home jointly with someone you know well. There are the immediate and obvious financial benefits of having someone else to help with the deposit, paying for the mortgage and covering other property-related expenditure – sharing the financial burdens of a household can work out much better than struggling to deal with everything yourself.
Many sharers also find tremendous social benefits in living with a close friend or family member, especially if you share interests – many students look back at their years of flat-sharing as some of the happiest times of their lives.
As with any domestic relationship, it’s easy for friends who live together to fall out. This might be over something fairly minor, such as whose turn it was to take the bins out or to do the food shopping – or it could be a more serious matter like a missed mortgage payment or a dispute over whose responsibility it is to deal with a bill or pay for property repairs.
This is why it is vitally important to fully and frankly discuss the ins and outs of the situation beforehand. You should mutually agree and record everything in detail: the deposit arrangements; responsibilities for payment of the mortgage, council tax, insurance, domestic bills and unexpected household expenditure; the division of household chores; ground rules for the use of common areas; smoking rules … and so on.
By discussing and agreeing house rules and responsibilities in advance you are much more likely to make a success of the arrangement than if you opt to just play it by ear!
The legal stuff
Once you’ve discussed the ins and outs of buying a house together, it makes sense to sign a legally binding document that each party must stick to no matter what happens in the future. Many people in this situation draw up documents using the same conveyancing solicitor who is dealing with the house purchase.
Legal documents such as a cohabitation agreement and a declaration of trust can be used to set out clearly how the property ownership is divided (remember that a joint ownership between two parties needn’t necessarily be on a fifty-fifty basis) and, crucially, what should happen under certain circumstances, for example if one party gets married and moves out, or wants to sell or let out their portion of the property.
It is also worth considering setting up a joint bank account for the mortgage payments, council tax and any other joint property-related expenditure.
Getting a joint mortgage
Although not all lenders are willing to lend to people who want to buy property with friends, a number of companies – including major high-street banks – now offer this type of mortgage.
If you do choose to buy property this way, always remember that joint mortgage holders are “jointly and severally” liable for the mortgage debt, and this means that if your home-buying partner can’t pay his or her portion of the mortgage you will be fully liable to make up the shortfall.
Here's an amusing viewpoing in Buying A House with Friends from The Telegraph