Five Considerations Before Buying a House with Friends

Young people are facing difficulties when trying to make their first steps onto the property ladder.

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With house prices remaining high, owning a property is out of reach for many people. One potential solution is for a group of friends to pool their resources and buy a property together.

However, there are a few factors you should consider in order to avoid conflict. Here are five considerations before buying a house with friends.

1. The sharing of the deposit, mortgage and fees

Ensure that you discuss whether the mortgage payments, deposit and other fees will be paid equally. For example, you might split conveyancing fees, such as those charged by

What will happen to an individual’s share in the property should they die? No matter how difficult these conversations may be, it is important they are discussed before any paperwork is signed.

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You must state within a declaration of trust document who owns the property, the share to each party, and in the event that the house is sold, how the proceeds are divided.

2. Moving out

One of the owners of the property may want to take their share of money from the home and move out one day.

What will happen to the property and the remaining owners? Will the home be sold, or will the other owners of the property purchase the remaining share? What would be the terms of this sale?

3. Mortgage liabilities

Liabilities for the mortgage will be joint and several, which means that if one co-owner leaves, there is a dispute or they lose their job and can no longer afford to pay, the responsibility for paying the mortgage falls to the other co-owners.

4. Stamp duty costs on another property

If one of the owners of the property wants to purchase another home on their own and leave the property, it is important to bear in mind that they will not be considered a first-time buyer. This means that more stamp duty tax will be payable.

5. Buying more property

If a co-owner can buy another property on top of the one they own with friends, they will be liable to pay a further 3 per cent stamp duty on the purchase price. This tax is intended for buyers of holiday homes or buy-to-let landlords.