As housing prices continue to outpace average income growth, many Kiwis are finding new and creative ways to achieve their homeownership dreams. By exploring options such as “co-buying” with family or friends more people are jumping onto the property ladder together.

Through pooling resources co-buyers can get on the property ladder sooner or buy a better-quality home in a more desirable location. However, owning a property is a long-term commitment and people who consider co-buying need to ask themselves how strong their relationships is and if it will weather the many ups and downs that can come with property ownership. For example, while a co-buyer will own half the home, they will be liable for the whole mortgage. If one co-buyer loses their job and can’t pay for their share of the mortgage the other co-buyer will have to step in. Here are some steps potential co-buyers should follow.

Have a written agreement in place and exit strategy

It is important co-buyers have frank conversations about all aspects of property ownership. Agree on what will happen if one owner wants to sell the property, and the other does not, and the process to be followed if there is a dispute over something else. Have this wide-ranging agreement in writing – and ideally drawn up by a lawyer if you’re feel you need an extra layer of surety.

Use the right ownership structure

'Joint tenancy' is where the owners have an equal share of the property. This is suitable for married couples or de facto partners because if one owner dies, the other inherits the entire property.

The alternative to consider is a 'tenants in common' arrangement. This form of joint home ownership allows co-owners to hold separate and distinct shares in the property, which can be equal or unequal. Each co-owner’s share can be transferred or bequeathed independently without affecting the interests of the other co-owner. 

Get expert advice 

As well as getting legal help to have an agreement drawn up, get expert advice on the best kind of home loan to take out and contact a Raine & Horne real estate professional to help you find the best property in your price band. Ian Keightley, Head of Operations, Raine & Horne New Zealand said it was important co-buyers carefully consider the implications of shared ownership and are open with each other about their future plans and the factors that could impact them in five or 10 years. 

“Relationship is key, and you should only buy with someone you trust, and who shares your goals around property ownership. Frank discussions, especially about what could go wrong, a carefully drafted agreement which all parties fully understand and commit to, and the use of expert advisers will provide co-buyers with a solid start to their property journey,” Ian said.

Whether you want to sell buy or rent a property, don’t hesitate to contact your local Raine & Horne office.