A recent study by ING has found purchasing a property with a friend is rapidly becoming a new trend in home ownership. Known as ‘Property Pals’ the research found that nearly half (47 per cent) of Australians who have purchased or are considering purchasing a property with someone other than a spouse or partner would consider buying with a friend; this equates to approximately 3.5 million Australians.

The trend appears to be driven by rising house prices, with nearly half (46 per cent) believing that buying a home with a friend will become common practice in the next decade if property values continue to climb. Younger generations are the most open to the idea: 50 per cent of Gen Z, 35 per cent of Millennials, 28 per cent of Gen X, and 14 per cent of Baby Boomers are considering becoming Property Pals.

The research also found:

• Around 1 in 4 respondents said the appeal of shared home ownership lies in the ability to share responsibilities and payments with someone else, as well as having more flexibility in property locations.
• Nearly one in 5 (19 per cent) believe that buying with someone else will allow them to purchase a bigger home than they could afford on their own.
• 22 per cent consider it a more sustainable and environmentally friendly option than living alone.
• 32 per cent would consider shared ownership to start building a property portfolio
• 29 per cent would consider shared ownership for a holiday home.

What you need to consider:

‘Property Pals’ is not a new idea. Often known as joint ownership or co-ownership, buying a property with someone who’s not your spouse or partner does need formalising; this will ensure you both fully understand what your joint responsibilities and obligations are, and safeguard your finances. It can save misunderstandings later down the track, and the potential loss of a friendship.

Here’s what you need to consider and set in place:

• First and foremost, only buy with a trusted friend!
• Discuss the type of property you want, and location.
• Formalise the mechanics for future possibilities – for example, what will happen if one of you wants to sell?
• Check your mortgage options. You may be able take out a mortgage together, in which case you’re both accountable for repaying the loan; if one person can’t make their repayments, the other may need to chip in. Alternatively, you may choose to take out separate mortgages; again, this will have implications if one party falls behind on their mortgage.
• Consider co-ownership options. These usually come in two forms:
  • Tenancy in common: where two or more people own the property together. The shares can be of unequal sizes. The ownership can be passed to the chosen beneficiary of the owner.
  • Joint tenants with the right of survivorship: means both of you own the whole property equally. If one of the tenants passes way, the property will be given to the surviving one
• Ensure you have a solid financial agreement in place for running costs and any maintenance which may arise.
• Having a co-ownership agreement may have implications when seeking another loan.

Always seek legal and financial advice about ownership options before entering any financial commitment.

We’ve seen property co-ownership work well for many people, and it can work for you too. Speak to legal and financial specialists first and make sure you have a good agreement in place to ensure all parties fully understand what they are committing to.

Whether it’s owning your own property or buying an investment, with nearly 50 years in real estate and property management, our talented team is constantly looking for new and innovative ways to help you realise your property goals and dreams.

This is why we are one of Newcastle’s longest established real estate agencies, so give us a call on 02 4954 8833, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office for a chat.

And take a look at our Facebook page for information about anything to do with property.