A guide to property co-ownership
With property prices continuing to go up, many first-time buyers and indeed some investors, are turning to co-ownership as an option to get a foot on the property ladder.
As the name suggests, co-ownership is the term given to when two or more people jointly purchase and own a property.
But co-owning property comes with advantages and risks. Whether you’re teaming up with a friend, sibling, partner, like any major financial decision, it’s important you understand and consider all the aspects of the agreement.
Here’s a simple guide to the benefits, risks, and key safeguards of co-owning property.
Why consider co-ownership?
- Increased buying power
Buying with someone else means you can pool your savings and borrowing capacity, giving you access to homes or investment properties in better areas or with more features.
- Shared costs
Mortgage repayments, stamp duty, maintenance, and utility bills can be split between owners, making ongoing costs more manageable.
- Flexible ownership structures
Ownership can be split in various ways depending on contributions—50/50, 60/40, etc.—which gives co-owners flexibility to align the arrangement with their financial situations.
- Faster entry into the market
Instead of spending years saving for a full deposit on your own, co-ownership can get you into the market sooner, which is especially valuable in a rising property market.
- Investment potential
You can also co-own an investment property to generate rental income and grow equity together. Some buyers use this as a stepping stone before purchasing their own solo home.
What are the risks?
- Disagreements and relationship breakdown
Even the best relationships can hit rough patches. If one person wants to sell, rent the place out, or renovate—and the other doesn’t—it can get quickly get complicated.
- Change in financial situation
If one co-owner loses their job, defaults on the mortgage, or goes bankrupt, it could impact your credit score or force a sale.
- When you need to sell
Unlike a solo property, you can’t just decide to sell without agreement (unless your co-ownership agreement allows it). Finding a buyer for a partial share can also be tricky.
- Borrowing limits
Being on one mortgage might reduce your capacity to borrow in future, even if you’re only responsible for part of the repayments.
How to protect yourself: key safeguards
- Get legal and financial advice
Before you commit, speak with a property lawyer and a mortgage broker or financial adviser. They’ll help you understand the tax, loan, and legal implications of the arrangement.
- Choose the right ownership structure
There are two main types of co-ownership:
Joint Tenants: Equal ownership, automatic inheritance if one party dies (more common for couples).
Tenants in Common: Ownership shares can be unequal and left to someone else in a will—ideal for friends or family co-investors.
- Draw up a co-ownership agreement
An agreement is essential; it should be prepared by a solicitor so both parties are protected and fully understand what is expected. As well as outlining the financial obligations of the parties involved, the agreement should also include how the property is used, who is responsible for repairs, or what improvements should be made. Without a clear agreement, these issues can escalate quickly.
For instance, a good co-ownership agreement outlines:
- How ownership is split (e.g. 50/50 or 70/30)
- Who pays what (mortgage, rates, insurance, repairs)
- What happens if one party wants out
- How disputes are resolved
Make sure the agreement is tailored to suit your individual situation and you fully understand what you are signing up to.
- Plan for the exit
No-one wants to think about break-ups, deaths, or fallouts—but it’s imperative this scenario is factored in. Your agreement should also include a plan for:
- What happens if someone wants to sell
- How the property will be valued
- Whether other co-owners get first right to buy out
Co-ownership is a great option for many, but it’s not for everyone. With the right preparation, clear communication and transparency, and legal protections in place, it can be a win-win situation.
If you’re considering co-ownership, take your time, get advice, and make sure everything is in writing. That way, everyone involved will know what the agreement is.
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