Sharing accommodation with a friend or sibling is a time-honoured way to reduce living costs - but an increasing number of people are now taking it a step further and buying property together to try to beat the effects of high interest rates.
For many young buyers it is the only realistic way to enter the property market, says Martin Schultheiss, CEO of the giant Homenet real estate group. "However, while you certainly don't have to be married to share ownership of a property, joint ownership can create problems if partners rush into a transaction," he says.
"Before buying, you should first consider the eventual sale of the property and make sure that all partners are prepared to stick to a pre-determined course of action when that time comes. Partners who fail to do this may find their friendship on the rocks if one wants to sell and the other doesn't," Schultheiss warns.
"Vague agreements might sound acceptable in the excitement of buying a home but are unlikely to be worth much in the event that partners disagree about selling the property, making additions or perhaps sub-dividing a stand," he says. "The best course of action is to sit down, thrash out likely problem areas and then draw up a binding co-ownership agreement."
An experienced estate agent or an attorney can be of assistance in this regard, and a fee paid to a professional at this stage is a small price to pay to prevent later litigation - and the possible loss of a friendship, he says.
"A possible solution is giving a partner who does not want to sell, for example, the first option to buy the other's share and to stipulate how a market-related price will be determined. It would also be a sound idea to stipulate a reasonable period for the remaining partner to obtain finance."
Schultheiss adds that partners should also not neglect to take out life insurance that covers the bond. "Insurance will enable a surviving partner to pay out the amount due to the deceased partner's estate without having to rush into a forced sale."
ISSUED BY HOMENET