Your friendships can be some of the most stable relationships you have in your life, so it makes sense that some people would want to share the experience of buying a house with their close friends. As fun as this can be, it’s important to stay grounded and sensible as buying a house is no small decision. Here are some of the main things you’ll need to think about and discuss before buying a property with a friend.
Is it a good idea to buy a home with friends?
There are many reasons why people choose to buy a home with friends and are successful in doing so. To start with, getting on the property ladder can seem like an impossible feat for some people, especially if they have not qualified for a mortgage, haven’t accumulated a big enough deposit on their own, or cannot comfortably afford to juggle monthly bills without some help. Buying with other people is a practical way to get on the ladder and diffuse the financial burden of running a home.
It’s also common to find tremendous social benefits in living with close friends, especially if you are like-minded people with shared interests. Many graduate students will look back on their years of flat sharing as some of the happiest and most fun times of their lives. Others who have great experiences in renting with roommates and are eager to get on the property ladder may wonder why they couldn’t just enjoy living with friends, whilst also owning some equity in the property they live in.
What are the downsides?
As with any domestic circumstances, fallouts are possible if not highly probable. This only becomes a problem when disputes over dishes turn into disputes over the mortgage.
The three main things you will need to ask yourself about a person before moving in with them are:
1. Do I know them well enough?
2. Have they given me good reason to doubt and/or distrust them?
3. Are their long-term goals aligned with my own?
Future plans will come into play sooner than you may think, and you’ll need to discuss things like current or future partners, and where they might stand in relation to the house – should they be allowed to move in if your co-owner wishes? What would happen if one of you wanted to sell or dissolve the agreement? What happens if one of you loses your job – who would cover their payments?
You will need to approach this from a business perspective and have these mature discussions up-front, even if it feels unnatural to do-so with friends. In the long run, by choosing a trustworthy friend who is good with money, you’ll avoid finding yourself in a situation where you’re struggling to get by because a friend has let you down financially.
How to I prevent these potential problems from occurring?
First and foremost, you should only buy a property with people you know well and trust, preferably people you have lived with previously. Even if you regard your friends as family, it’s important to take sensible precautions.
Secondly, you must put a legally binding cohabitation agreement in place before going forward with a purchase, this will ensure that your investment is protected. A cohabitation agreement should be drawn up by a qualified solicitor, which should cover as a minimum:
- Precisely what share of the property each party owns
- How much money each person will put towards the deposit and/or mortgage
- How the property should be valued should one or all of you wish to sell, and who will handle the process
- Specific procedures for dealing with disputes and disagreements between house members
- Who pays for maintenance, and how any costs will be shared
- Whether rooms can be rented out and who gets to select the tenant
What kind of property should we buy?
The type of property that works best for you and your friends will depend on your circumstances, budget and lifestyle, and you should have a good idea of which type of property would best suit your needs before you agree to buying with a friend. However, it’s important to note that things won’t always go to plan, or you might even see the house as more of a short-term measure. Therefore, it could be a good idea to go for something that you would be able to sell quickly, should the need arise. That might include:
- Flats
- Homes with separate bedrooms and bathrooms
- Homes with large living and kitchen areas
- Homes that do not require significant renovation or repair
Other things to consider…
Although disagreements are natural when sharing a living space, you can avoid arguments and make living together more comfortable by putting a few healthy boundaries and rules in place from the get-go. You might consider:
- Setting up a joint account from which mortgage payment are taken
- Putting together and inventory of home contents, with details on who owns what
- Establishing some house rules dealing with things like noise, friends staying over, pets, smoking and cleaning.
For more information, contact us today.
