Buying Property With Friends Made Simple

Buying property with friends – a growing trend

The barriers to home ownership remain challenging for young people. 67% of 25-34-year-olds say getting a deposit together is their biggest hurdle and we know that half of first time purchases are only made possible with the help of the Bank of Mum and Dad. 

As it becomes tougher to buy, young people are becoming more creative about how they get on the ladder. Back in 2018, HSBC found that around 1 in 7 young adults would be open to buying with someone who isn’t their partner. It’s no surprise then that news stories about friends clubbing together to buy their first property are becoming more and more common. Buying property with friends means you can pool resources, which can increase your borrowing power which in turn allows you to access cheaper mortgage rates.

Is buying property with friends a good idea?

Challenges often come from nervousness about the sums involved and questions of trust. People might be worried about ruining friendships by buying with friends or the changing relationship dynamics once serious money is involved. Even within families, there is often a fear of awkward conversations. 

It’s important to treat buying with friends as a serious financial arrangement and get the right legal protection in place. That way, you minimise the risks of misunderstanding and you’re in a much stronger position to feel secure if circumstances change.

4 steps to make buying property with friends work

Here are four steps you can undertake to ensure the process goes smoothly – 

1. Find out what you can afford: Consulting a mortgage broker can help you identify the increasing number of lenders interested in supporting multi-person mortgages. It’s a good place to start as you can then work out how much you all need to commit and how to involve others.

2. Track what you are contributing: Different deposits and income levels can make it complicated to figure out what’s a fair share of the home to own when buying with friends. You can work up your own spreadsheet or take the stress out of it by using a platform like MaryR. It enables friends to buy together but own individually, with ownership shares changing based on what you’re contributing at purchase and beyond.
   
3. Get it in writing: Investing in property is probably one of the most significant financial steps you’ll ever take, so it’s a good idea to choose the right title and put in place a formal legal agreement underpinning your arrangement. If you are contributing different amounts to the home, you may want to use the title ‘Tenants in Common’ which allows you to own in unequal shares. It’s typically used by friends buying together. You can then set out in a Deed of Trust how your shares are calculated (you could refer to a spreadsheet or tool like MaryR there) and what might happen to the shares in different scenarios. If you want to own everything together the title of Joint Tenants allows you to do that. Speak to your lawyer to see what works best for you.

4. Talk about the exit: Be clear about when you want to move on. When buying a home with a friend, discussing what will happen when one of you wants to sell their share is essential. You could consider using remortgage dates or equity milestones as a point to check in with your co-owners. 

At MaryR, we make buying a home together simple. We support buyers to find out what they can afford, buy that dream home and own knowing their interests are protected. If you want to avoid awkward conversations and get the clarity and confidence you need to purchase with friends, sign up today.

With MaryR it’s simple. Kick off the purchase process. Instruct a lawyer (we can help with that) and set yourself up on MaryR. We’ll start tracking each individual share.

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