With Valentine’s celebrations this week, many couples could be considering combining their savings to buy a first property together. Given that purchasing a home in North and North West London is likely to cost a minimum of between £200,000 and £250,000, purchasing solo is often not an option. Particularly so when you consider the associated costs and income required to obtain a mortgage – the reality is purchasing with a partner or indeed friend may be the only way to get a foot on the housing ladder.
However it is crucial that, in such a situation, head trumps heart and you make the decision to buy with another party objectively. Buying jointly requires a lot of trust, transparency and above all good planning. For anyone considering a joint ownership arrangement, there are a few key considerations that will ensure you don’t get left wishing you’d gone it alone.
One of the benefits of buying with a partner or longstanding friend should be an inherent level of mutual trust. However, this doesn't mean it isn't worth consulting lawyers about a legally binding co-ownership contract and agreeing in advance what will happen if one owner's circumstances change. Although it might not seem romantic or comfortable to address with a partner or friend, it is crucial that you consider the worst outcome as a means of protecting you both. Not doing so could end in a total breakdown in your relationship, and lots of costly disagreements that often result in someone losing out. As well as agreeing how the deposit contributions will be repaid, be sure to clearly outline how any profit will be split when the property is sold.
On this note, it is important that you each have a clear paper trail for all decisions and transactions made. All paperwork relating to the property or mortgage must be in the names of the co-buyers, and remember to get any agreements written down – especially if the parties are not contributing evenly. Making copies of all documents associated with the purchase is a good idea as it allows them to be readily accessible to both parties and ensures there is always a record of joint decisions. Remember to treat decisions about the property as business transactions. Regardless of who you buy with, ensure important agreements are recorded in writing.
This even applies to the nitty gritty details, such as who owns the sofa or television. Drawing up a comprehensive inventory of non-shared items or other costs, and keeping a note of who pays for things at the start of the transaction, can reduce confusion down the line.
Overall, no matter how exciting a decision this is (and buying your first property is always an exciting and emotional process) it is important to retain realistic expectations and remember that circumstances – whether jobs, relationships or family – can change, so be honest about your reasons for buying together. Ultimately this purchase must be an investment for both parties, and as such the decision should be treated as dispassionately as possible. It may be enticing to look for a home that ticks all your boxes, but remember that your first home is exactly that – your first. Whether the relationship continues to flourish or not, needs will change and at some point you will want to move on. For this reason, co-ownership should always be treated as an investment decision and buying a property with good potential for capital growth makes sound business sense – a comfort in the midst of any breakup.