With house prices rising, it’s becoming increasingly difficult to get a foot on the property ladder, especially if you’re single. As a result, a growing number of people are considering buying a home with a friend.
While there are numerous benefits to buying a home with a friend, there are downsides to be wary of as well. Ask around and people will typically tell you that this plan is a surefire way to destroy any friendship. However, this is a common misconception, and while it can happen, it’s by no means a certainty.
You can make a real success of it, but communication is key. Simply talking things through beforehand can help you see whether you and your friend can make it work or not.
Interview your friend
No matter how long you’ve known someone, buying a home together should be considered more of a business venture than an emotional adventure. As such, you’ll need to spend time discussing serious issues, and making sure that you’re on the same page. By asking a series of questions, you can determine where you each stand, and how similar your goals are. It’s important to do this early, before you’re fully invested in the idea, so that you know whether you’ll be compatible or not.
- What are your intentions for the home? Do you see this as a social hub for you and all your friends? Or are you thinking more along the lines of a place to relax after a hard day at work? It’s essential that you’re on the same page on this.
- How long do you plan to keep the house before moving on? This is a little open-ended, but aim to find out a minimum time-frame with which to work with. Is your friend being realistic about how soon they’ll be able to afford to move on? It’s important to discuss the end-goal, and realize that this venture is probably not forever.
- What type of home do you want, and what are your must-have features? Finding the perfect home is difficult enough, but trying to please 2 separate parties can make it far more difficult. Create a list of wants and needs, and compare it to your friend’s list. If you have drastically different ideas, you might be in for stormy weather.
Once you have a clearer picture of both of your expectations and intentions, it’s much easier to know whether this can actually work in reality. Simply assuming that your best friend knows what they’re doing, and is on the same page as you can have disastrous consequences further down the road.
The next step is to discuss who will be responsible for each task in the home. We’re not just talking about chores here, you need to decide whose name will appear on the mortgage if not both, who will take charge of paying the bills, taxes, and insurance, who will buy furniture and appliances, and who’ll take care of maintenance and repairs. The list goes on, and it’s well worth deciding on how you’ll go about splitting the tasks well in advance.
Dispute resolution and anticipating the end
Of course, nothing is ever perfect, and even the best of friends can fall out. The best approach is to treat this discussion like any other business discussion, with eyes and ears open, and emotions shut down. Indeed, by all means, hope for the best, but be sure that you plan for the absolute worst, and have a clear exit plan in place should you need it.
What happens if… is the question you’ll need to answer. Don’t think only of the worst-case scenario though, many things can happen that are beyond your control, and it’s good to have processes in place to ensure both parties are protected. Consider how you’ll deal with the following issues in the future:
- One party meets a partner, and they want them to move in
- One party wants, or has to (for work, illness, etc.) move out
- One party wants to rent their part of the property out
- One party can no longer afford to keep up with the payments (job loss, illness, accident, etc.)
- One party dies unexpectedly
- A major repair or other cost is needed
Get it in writing
You’ve spent a lot of time discussing awkward, and serious topics with your friend. If your friendship has survived so far, you’ll be able to face anything! But simply discussing these things isn’t quite enough. It’s essential that you get it down in writing, and create a legally binding contract, detailing everything from dispute resolution procedures to the financial aspects. Discuss this with a solicitor, and ensure the contract covers everything you’ve discussed.