Considerations when Buying Property with a Partner
Buying property with a partner or a group of friends is a popular choice as it can help you raise a bigger deposit and get you on the housing ladder. As with any big commitment though, the decision needs to be carefully planned and documented in order to avoid any future headaches.
While it may be difficult or uncomfortable to plan for the end, when only just starting at the beginning, signing a co-purchase agreement is important, as it protects all of you. This agreement aims to set out each person’s rights and responsibilities, covering things like who will pay the bills, what happens if the relationship breaks down, who will reside in the house and how a party can sell its share.
Let’s focus on the important aspects when buying property with a partner, things to consider when buying with a spouse, and what you should keep in mind when moving in with a partner who already owns property.
Buying Property Together
- Discuss and work out all the details of the partnership and each partner’s commitment before making an offer. Once the pressure is on and deadlines are looming, your decisions may be clouded.
- One of the best property buying tips is to draw up a contract between the two parties so that there is no doubt about what was legally agreed upon.
- Discuss the different scenarios of what might happen down the line. Everything from best case to worst case, considering the possible outcomes.
- It is important for all the parties involved to disclose any financial issues that could influence the partnership, as each party will have to go through the same financial assessments as individual buyers.
- Build up your combined budgets and make use of online calculators to discover your joint affordability.
- Consider getting prequalified before you start house hunting. This will give you an idea of your joint affordability and whether there are any financial issues dealing with your credit records. Be sure to read our property buying guide.
- When the property is found, parties should split the costs of purchase and maintenance equally. If this isn’t possible, it is important to keep careful track of each individual’s expenses.
Buying Property with Spouse
- In the case of a divorce, the marriage contract will govern the way that the property is shared.
- If married in community of property, both parties are liable for the debts and will share equally in any gains.
- If married out of community of property, each party will own a share of the property and will have to agree on how to dispose of it.
Moving in together
- If you move in with a partner who already owns a property, you must create a contract to record the contributions of the new partner to the property.
- If you are planning on building a new life together with the partner, the property should be registered in both names. This makes it possible for both to own a share in the immovable property and neither will be at a financial disadvantage.
- The original property owner will have to sell half of the property to their partner at a fair market rate, with fees including transfer duty and the costs of cancelling the existing bond and registering the new bond in both parties’ names.