Buying a flat with a friend
Q: I’m buying a flat with a friend of mine. What do we need to consider before we go ahead?
A: Buying a property with a friend is becoming a really popular way of getting onto the property ladder. It is a big step financially and legally, and you essentially need to agree ‘prenuptial’ terms before you embark on such a big commitment together.
I would suggest you thrash out all terms before you start your property search. That way, you will have everything already set out and agreed so you can proceed straight away as soon as you do find the right property.
As well as agreeing on the type of property you’re looking to buy, you will need to cover a lot of points, for example, you should set out who owns what proportion of the property. If it is not a 50:50 split then let your solicitor know when you start the buying process and they can ensure that the ownership documents correctly reflect the ownership split.
You also need to agree all maintenance and running costs – will you be paying the bills and house hold essentials in equal amounts and if so, who will pay what? You could each pay a certain amount into a ‘household’ account and all bills come out of there. And who will be buying the furniture, and all other household items that you will need? Will you put money into a joint pot and agree on items, or will you divide up what needs to be bought and you buy different items? If you go down the latter route, you will need to agree if you will each retain ownership of your respective items whenever you do sell. Do you need to be in agreement with what you buy or are you happy to accept what each other choose? These practical points are really important to avoid arguments later down the line.
Ground rules for the use of the property should also be ironed out. For example, would you each like one night per week where the other one makes themselves scarce? Or do you expect each other to do the washing up before you go to bed, or are you happy for the other to leave them until the morning? These may appear to be really small points, but if you’ve had a flat mate, you will know how quickly a relationship can sour as a result of small things building up. Buying a property together is a long term commitment so you really need the friendship and ‘working relationship’ to be a success.
Equally you should discuss your eventual sale. For example, do you need to give the other one a certain amount of notice and how will you agree what price you’re both happy to sell for? If one of you wants to sell and the other doesn’t, how would you handle that? And what proportion of capital gain should each benefit from?
Once you have agreed on all of the above points, I would draw up an agreement outlining this. Perhaps run it past your solicitor too. Once that’s done, you can then enter into your home search with joint excitement, knowing that all the ‘business decisions’ are agreed and in place.
If you have a question you’d like Jo to answer please email firstname.lastname@example.org or tweet her @joeccles.