Home buyers look towards joint ownership

WOULD-be first time buyers struggling to raise large deposits or secure finance from reluctant banks could consider buying with family or friends as a potential solution to help spread the costs of buying and maintaining a home.

But with a house likely to be the biggest purchase of a lifetime, it is important for anyone considering a joint ownership arrangement to get it right from the start, according to the National Association of Estate Agents (NAEA).

Wendy Evans-Scott, President of the NAEA, said: “Despite a slight increase in the provision of mortgage finance, many first time buyers are still struggling to get on the housing ladder. This problem has been exacerbated by the Government’s refusal to extend the stamp duty holiday for properties under £250,000 in particular.

“Splitting the cost of a substantial deposit, maintenance and mortgage repayments could make owning a home a more realistic aim for many would-be first time buyers. I would, however, advise anyone looking to enter into joint ownership that a transparent relationship between all parties is imperative if the process is to go smoothly. That is a vital step whether you are buying with family, friends or another third party.”

To aid buyers, NAEA recommends the following:

• Consider your mortgage options – There are mortgages that exist specifically for this type of purchase, so shop around for the best deal. Remember that, with a combined income, it may be possible to attain a mortgage of higher value, giving you greater choice of properties

• Think about the worst case scenario – One of the benefits of buying with friends or family should be a high level of trust, but that shouldn’t be to the detriment of legalities. Consult lawyers about a legally binding co-ownership contract and agree in advance what will happen if one owner’s circumstances change

• Keep paperwork in order – Remember, this is a business transaction, and any paperwork relating to the property or mortgage must be in the names of the co-buyers. Ensure copies are made of all documents associated with the purchase to allow them to be readily accessible to both parties

• Don’t forget who owns the TV – Drawing up a comprehensive inventory of non-shared items or other costs, and keeping a note of who pays for things like paint, at the start of the shared ownership can reduce confusion months or years down the line. This should also help if one party decides to move out

• Set a realistic timeframe – If you are buying with a friend it is likely that the relationship is, ultimately, temporary. For this reason, co-ownership should always be treated as an investment decision and buying a house with a good potential resale value makes sound business sense