Thursday, May 19, 2011
Struggling first time buyers are increasingly finding it easier
to get on to the property ladder if they buy a home with friends or
family.
But with a house likely to be the biggest purchase of a
lifetime, it is important to get it right from the start, according
to latest advice from the National Association of Estate Agents
(NAEA).
Peter Bolton King, Chief Executive of the NAEA, said of joint
ownership, "At a time when a lack of mortgage finance is hindering
first time buyers, opting to buy with a friend or relative can
represent a sensible way of getting into the market."
"Twice the number of bedrooms doesn't always mean twice the
cost, so sharing the price of a home, and the deposit - as well as
bills and maintenance costs - can make real financial sense.
Importantly, both owners don't necessarily need to live in the
property - a person living in London could invest in a town with
lower house prices with a friend who lives there, and rent out the
second bedroom."
"However, for anyone considering entering into a joint ownership
I would stress the importance of a transparent, open relationship
between all parties involved to ensure a smooth purchase and
ownership process. Remember, this may be your home, but it's also a
business transaction and one of the biggest decisions you'll ever
take."
To aid buyers, NAEA recommends the following:
- Consider the Worst Case Scenario-Buying a home should be a
positive experience, andone of the perks of buying with friends or
family should be a high level of trust, but that shouldn't be to
the detriment of legalities. Consult lawyers about a co-ownership
contract and agree in advance what will happen if one owner's
circumstances change
- Get the right mortgage -There are mortgages that exist
specifically for this type of purchase, so shop around for the best
deal. By combining in this way it is possible to attain a mortgage
of higher value, due to the increase in income afforded by applying
with a joint wage
- Keep paperwork in order-Documents associated with the purchase
should remain accessible to both parties. Any documents relating to
the property or mortgage should also be in the names of each of the
co-buyers
- Count the pennies-Often a joint bank account is the best way to
ensure that mortgage/utility payments are met promptly. If all
parties have access to the account it also ensures that any
financial transactions are handled transparently and are not the
sole responsibility of one owner
Know who owns the sofa - To avoid disputes, drawing up an
inventory of non-shared items at the start of the residential
period can ensure that there is no confusion about which items
belong to whom. This should also help if one owner decides to
move out