When you are trying to get on the first rung of the property ladder, it can often be a good idea to pool your resources in order to make your money go further.
However, like any serious partnership, you will have to have everything in writing. Usually people either purchase property either on their own, or with their spouse. However, if you are buying with a friend or other family member then the benefits can be the same – the only difference will be in your Will.
Married couples tend to purchase property as ‘Joint Tenants’ meaning that each co-owner owns the whole of the property and neither owner has a specific or identifiable share. If you sell the property, you are each entitled to half of the sale proceeds, regardless of how much you each contributed to the purchase price or to the mortgage repayments. Neither of you is entitled to sell your share of the property.
If one of you dies, then the surviving co-owner will automatically own the whole of the property, regardless of any wishes that you have made in your Will stating otherwise. This is known as the ‘Right of Survivorship’ and is ideal for married couples – but it isn’t suitable for friends buying together.
So, if you are pooling your resources with a mate, then you need to make sure that you purchase as ‘Tenants in Common’. This means that each co-owner owns a specific share of the property, which is usually 50% each but it is possible to hold unequal shares.
As you each own a separate share in the property you are both entitled to leave your individual share to whoever you please in your Will. If you do not have a Will when you die, your share will pass to your next of kin, making it ideal for friends or business partners who wish to purchase a home together.