Joint ownership is becoming a more common way for people to get onto the property ladder, and/or buy an investment property.

Also known as co-buying, this method of purchasing a property allows friends and family members to split the costs of both the purchase and on-going costs.

On the face of it, it looks like a great option.

For example, because there are two or more people involved, you may have a larger budget and can afford a better property. You’re on the property ladder and all buying and ongoing costs are shared. This may mean you have a bit of money left over at the end of the month to use in other ways.

While it may seem like a great opportunity to get on the property ladder and start an investment portfolio, it’s always advisable to look beyond the sales pitch and know exactly what is involved and what the risks are.

Additional costs

Yes, costs are shared, but there may be additional costs associated with setting up a co-ownership agreement. The agreement will usually set out the rights and obligations of each person with a share in the property, so they fully understand their obligations.

If you are leaving an agreement, there may be additional costs and other legal implications too.

Financial responsibility

While there is an agreement in place to confirm costs are shared, usually you are actually liable for all the costs associated with the property, not just your share. This means if your co-owner defaults on a payment, or can’t pay their share of the maintenance, you will have to pay the entire cost.

Changing circumstances

Circumstances do change. For instance, one buyer may meet a partner and want to sell the investment property to fund a family home or a wedding. This means the other owner will have either to buy the other owner out, or be forced to sell at a time they do not wish to sell.

The outcome might also affect your relationship with your family member or friend; relationships can turn sour or be destroyed over an investment property.

Other implications

You need to be aware, having a co-ownership agreement may have implications when seeking another loan.

We’ve seen property co-ownership work well for many people, and it can work for you too. Speak to legal and financial specialists first and make sure you have a good agreement in place to ensure all parties fully understand what they are committing to.

Whether it’s owning your own property or buying an investment, with over 40 years in real estate and property management, our talented team is constantly looking for new and innovative ways to help you realise your property goals and dreams.

This is why we are one of Newcastle’s longest established property management companies, so give us a call on 02 4954 8833, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office for a chat.

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