Buying with friends or family

Lesley Price FCILEx of CGM Solicitors discusses some of the matters to consider when looking to share the ownership of a property with friends or family members

There may be situations in which you may want to jointly own a property with

a family member or friend – whether that is because they are putting in a substantial sum to the purchase, or because you are looking to live in the property together. Unlike many other countries where the idea of “family property” is quite commonplace, the system in the UK can require a little extra work to provide the right balance of protection for buyers in these circumstances.

WORK OUT A BUDGET

It is very easy to view a property and fall in love with it on the spot; but don’t pick something without taking into account the legal, valuation and mortgage brokerage costs. Sit down and budget together carefully, ideally before you start viewings, so you all have a clear picture of what you can realistically afford.

It is worth remembering that if you purchase a property with someone else, you create a financial link with them. This means their spending behaviour can influence your own credit score if they run into financial difficulties. It’s a big financial commitment to link yourself with someone in this way, whether you are a couple or just friends, so we would suggest that a full and frank discussion with your co-owners about your finances is essential before going down this route.

AGREE THE BASIC GROUND RULES FOR SHARING YOUR HOME

A Cohabitation Agreement is a great way to make decisions in advance, such as who will pay what share of the bills and how you will fund emergency repairs. You can also set out rules for more practical aspects, like what happens if one of you wants a new partner to move in, or to rent their room to someone else rather than live there.

BEST LAID PLANS CAN CHANGE

Eventually, you will want to sell and move on, and this may not be together, or at the same time. You need to consider what would happen if one of you wants to sell their share and whether you would be able to buy them out and remain in your home, or whether you would need to sell and move on independently. You will need to agree a value for your home and, having a method in your Declaration of Trust already set out for this to be independently set by a surveyor, is a great way of ensuring that the division of your joint home does not put an end to your friendship.

BE PREPARED FOR THE WORST

Redundancy, death, serious illness, and bankruptcy are all matters we would hope never happen to ourselves or to those close to us, but they are all eventualities that, when looking at buying property together, are sensible to plan ahead for. It is tempting when buying a property to put off the issues of life insurance and Will planning, to save costs upfront. This is especially true if you are a first time buyer on a tight budget, but it really is important to invest the extra to make sure adequate life insurance policies are in place to pay off any existing debts on the property, and that you have up-todate Wills in place. This is important to ensure the future security of both buyers if something should happen to one of you.

We here at CGM Solicitors can provide a comprehensive advice service on property trust arrangements as well as our conveyancing services.

For more information as to the services we can offer, email enquiries@c-g-m.co.uk