As a first-time buyer, it can be tricky to get your foot on the property ladder. So more creative options, such as buying with friends, are definitely worth considering. But is this a good approach? In this article, we’ll take a look at the pros and cons of buying a house with friends, and consider the role of a declaration of trust.
Pros of buying with friends
One of the main advantages of buying a property with friends is that you can share the financial responsibility together. This means that you can collectively raise a sufficient deposit and then take on equity shares in the property. This allows you to have somewhere to live with a mortgage, that will hopefully grow in value over time, boosting your equity.
For many people, this is a better option than continuing to pay rent without building up equity. When you buy with friends, you can use a declaration of trust drawn up by a solicitor such as https://www.parachutelaw.co.uk/deed-of-trust to formalise the arrangement and the ownership shares. This will avoid any issues later down the line when one or more owning parties in the friendship group want to sell up.
Cons of buying with friends
Of course, a declaration of Trust can only go so far when it comes to the day-to-day realities of buying a property with friends. It’s also important to have a clear plan of what you’ll do when daily life gets in the way! Common issues include one of your ownership group losing their job and being unable to pay their share of the mortgage, or one or more owning parties wanting to sell their share of the house. It’s important to draw up a written statement as part of the declaration of trust that explains what will happen in every foreseeable situation.
In conclusion, there are certainly benefits to buying a house with friends, not least getting your foot on the property ladder, and affording a better home than you could on your own, but the approach isn’t without its risks. Consult a solicitor for advice before you make the move to safeguard your investment, and be sure that this approach will work for you before you take the plunge. You might want to limit the arrangement to a number of years, for example, before selling up or asking to be bought out.
