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Buy with friends – the answer to Generation Rent?

What is your living situation? If you are between 25-34 years-old, it is more likely than not you are renting rather than a homeowner, according to a survey by Shelter, and the rent trend looks likely to continue. But could buying with your friends be the answer?

Predictions show in five years less than 20% of people in this age group will own their own home while almost 70% will be renting. This is a very different picture to a decade ago, where almost 60% of households in this age group owned their own home.

Buying with friends could be one way to climb the greasy property ladder – but don’t go all in just yet. Make sure you know what the pros and cons are first – so you keep your friendships and your house intact.

Buying with friends – the benefits

There are plenty of costs when you’re buying a home, especially for the first time.  As well as mortgage repayments, there are also maintenance costs, your deposit and monthly bills to consider. If you’re sharing a home, you can also ease the individual financial burden. Sometimes, it can also be cheaper to buy than to rent.

Once you’ve paid off your mortgage, it’s now yours to own, and could be worth far more than you paid for it, which could help if you want to invest in a property of your own.

 

Mixing business with friendship

The old saying goes that you should never mix business with pleasure. The important thing to remember when buying with friends is that buying a house is a business transaction. It’s possibly the biggest one you will make, and you should make sure you talk through everything first.

Are you all putting in the same deposit amount for example? Who has bought what for the house? What if one of you wants to sell up before the others do? What if someone has a problem stumping up the cash month on month?

Write everything down

Writing down everything is a good idea. Have an inventory of all individual items and all shared items. Make sure it’s up to date and you are both happy with it. If you are putting in different deposit amounts, consider the proportion of the property each deposit amounts to and how you will split the proceeds if you sell.

Don’t forget everyone involved in the transaction is responsible for the mortgage repayments, so if one of you defaults, everyone is liable for the cost. Talk about any potential cash-flow problems openly at the beginning.

You should always keep paperwork in order by ensuring documents are accessible to everyone and signed by all of the co-buyers. It’s a good idea to get a solicitor to write down all agreements about the house for you.

Would you consider buying a home with your friends?

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