Louise Reyneke Properties

CO-OWNERSHIP: SPLITTING THE COST, NOT THE RISK

In today’s prevailing economic climate the property market is still very much a recovering one and current home owners tend to hold on to their properties for a little longer. It is therefore becoming increasingly difficult for new home buyers to crack the nod onto the proverbial property ladder.

 In spite of this, it is still considered to be a buyer’s market and affordability has become the name of the game. As a result, and primarily because of the significant capital outlay when buying proper-ty, many people are choosing to share the expenses of purchasing property and opts to buy a house with a friend or family member. Co-ownership is therefore especially attractive in that by jointly purchasing and owning property, you reduce the individual’s financial commitment involving home ownership significantly.

In light of the above we have noticed that more and more lenders are offering home loan packages especially designed for co-owners.

The most important aspect to buying property with family or friends is transparency. If you’re buying property with friends or family it is pivotal that the appropriate agreements are set up in advance in which it is addressed what you all want to get out of the venture, how you plan to fund the investment and what happens if one of you wants to sell their share of the property in the future.

Due to the deposit, transaction costs, bond repayments, maintenance and utility bills being shared among the co-owners, it is important that adequate records of all payments made relating to the property are being kept. To practically manage this we suggested that a joint bank account be opened from which the mortgage payments will be drawn. This account could also be used to pay for any agreed shared expenses. One bank account will enable everyone to keep track of payments and expenses more easily than if they were going in and out of separate personal accounts.

It is important to note that the fact that the property is owned by various owners does not negate the responsibility of each owner individually. Everyone involved in the transaction is responsible for the bond repayments, meaning that if one person defaults on payments, everyone is liable.

Anybody considering purchasing a property is choosing a good time to invest. Co-ownership affords property buyers who do not have a large enough deposit or income to secure a mortgage on their own, the opportunity to own part of a property through investing with family or friends.

 

Information supplied by Guthrie & Rushton Attorneys.

 

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