LEGAL
Who can “legally” help me buy my first home? With house prices at record high levels, and salaries not keeping pace, it is widely accepted that it has become increasingly difficult for first time buyers to buy their first home. Adam Crawford, Partner at Prince Evans Solicitors LLP, looks at alternative ways to buy your first home THE OPTIONS » Buying with friends » The bank of Mum and Dad » Mortgage guarantor » Shared ownership » Help to Buy: Equity Loan In this article, we look at the legal aspects of these alternatives.
BUYING WITH FRIENDS One option for buyers who cannot afford to buy a property alone is to buy with friends. This is becoming an increasingly popular choice. Things to consider If you are considering buying with a friend then there are legal aspects you should consider before deciding if this is right for you, such as: » What deposit and initial contributions are you both making? » Will the mortgage/outgoings be split equally between you? » What happens when you wish to sell the property or if only one of you wishes to sell? » What happens if someone dies (morbid yes, but it must be considered)? » What happens if you fall out? How are future price increases shared? When you buy a property with another person you hold the property as “joint tenants” or “tenants in common” and it is important you take advice from a specialist conveyancing lawyer who will be able to explain the difference to you and the options available to you. In most cases of buying with a friend, your lawyer will advise you to hold the property as tenants in common (where you can own different shares and the property does not pass to the survivor in the event of death) and may recommend you enter into a Declaration of Trust to reflect your ownership wishes and to address the questions above. It is strongly recommended you discuss
these points with your co-buyer friend, and instruct your lawyer accordingly, before you make the commitment of buying together, as while this may seem like a good idea (and often proves to be) the reality can often be very different, and it is best to be prepared for such an eventuality.
THE BANK OF MUM AND DAD The bank of Mum and Dad is where parents (or another relative or friend) gift you money towards the deposit of the property you are buying.
Things to consider If you are fortunate enough to be in a position where parents (or another relative or friend) are able and willing to gift you a deposit or part of it then you will need to consider the following legal aspects: » The deposit must be a gift and not a loan – if the money is a loan then it is highly unlikely any mortgage lender will accept this arrangement. » Your parents (or whoever makes the gift) will need to sign a “gift” letter confirming that the money is a gift and that they will have no legal interest in the property.
96 First Time Buyer December 2021/January 2022
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