HAVEN MONEY
MATES RATES Would you buy a home with a friend? As property prices rise beyond the reach of some single-income buyers, more Aussies are turning to mates to get a foot on the real estate ladder. And support for this alternative ownership pathway is growing. Last year, the Federal Government changed rules around first homebuyers’ schemes to allow friends and family to access financial support for the first time. Previously it was limited to couples and singles. Lenders are responding with new loans designed to simplify the process of borrowing together. Of course, if you struggle to split a pizza with your mates or are still holding a grudge over something your sister said in high school, it may not be for you. But advocates say buying with friends and family is not necessarily any riskier than buying with a spouse, given Australian marriages last on average eight years. And for younger Australians watching property prices rise, this may also offer an opportunity to break into the property market sooner than flying solo. But for those considering giving mates rates a go, getting sound legal and financial advice is crucial.
First up, get a good lawyer. You’re going to need a pretty comprehensive friendship version of a pre-nup. The good news is this can actually be a positive experience. Planning for a future where you may not be living with each other is a whole lot easier with a friend than a romantic partner. And if it’s not – that’s probably a big red flag. The first thing to settle is the legal structure of your co-ownership. Friends who buy property together most often do so as tenants in common, rather than joint tenants.1 The major differences are:
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• Renovation/decorating disputes. • Maintenance responsibilities. • Insurance arrangements (including income insurance for co-owners). • Contingency plans if one or both owners are unable to make loan payments. • Exit strategies.
The financials One of your broker’s greatest skills is they’re the voice of other people’s experience and will have undoubtedly helped others in your situation. They will also, of course, talk you through the range of products to suit tenants in common, some of which allow co-owners to hold and pay separate loans for jointly owned property.
The friendship
The legals
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A lawyer will draft a tenants in common agreement which should address possible sources of conflict, including ways to remedy unforeseen issues. Many law firms now offer online templates outlining potential issues, such as:
Tenants in common
Joint tenants
Co-owners can have specified shares in the property. E.g. 50/50 or 70/30. Each can sell their stake without the consent of others.
Co-owners have an equal stake and must agree to sell the entire property, or one may buy the other out.
If a co-owner dies, their share of the property transfers to their estate and is distributed accordingly.
If a co-owner dies, their stake passes to the remaining co-owner.
https://sunstateconveyancing.com.au/understanding-ownership-options
Respect isn’t just a song, it’s the basis of any healthy relationship. Before you go house-hunting, draw up a list of must-haves and negotiable features. This will obviously be much easier if you are looking for an investment property, rather than one you plan to live in together. Be prepared to consider everything and think how it will work in the long term. For example, many co-owners look for properties that either have dual living or have the potential to add it. Be prepared to let properties go if they don’t tick both your wish lists.
