|Jillian Godsil. Picture: www.sjpireland.com|
Buying with a friend is one way of jumping on the property band wagon without waiting for Mr or Miss Right to arrive. There are many reasons why it makes sense – pooling of financial resources, choosing to live in a nice area that you like, stop paying dead money to rent and moreover now taking advantage of the low prices available.
However, with all the excitement that comes with purchasing with a friend there are some markers that need to be addressed first.
The biggest issue is the exit clause. Today you are both excited about buying a house or flat together. You have loads of plans from the mad house warming party, on decorating the living room and building the barbie in the garden. But before you both sign on the dotted line, please take time to consider how you will leave the flat. Perhaps it might be because one of you will find a life partner or lose a job or move country, but there are many changes on your life that will affect your house ownership and you need to address it at the start.
I speak from personal experience as I bought with a pal in London back in 1989. London property was on a strong upward spiral and there was an artificial deadline for joint tax relief that ended in August. My friend and I availed of this tax break, bought before the deadline and then watched as the property market took a nose dive.
This was not important or so we thought. For the next two years we had a great life style, the flat was super, central to work, great for parties but also good for living. We loved Islington and all that it offered.
However, we did not think about what next step. As it happened I fell in love and emigrated to Australia. I could not take the flat with me, my friend could not buy me out, and I could not afford to pay the mortgage while in Australia. So, I found a flat mate who agreed to take my room and pay rent. As it was somewhat rushed, this new person was a friend of a friend and I didn’t really know him. It turned out to be a less than happy pairing and my poor friend now had to manage all the house plus share the house with someone that she did not get on with.
And so the flat went on the market and was sold six months later. Again my poor friend had to manage all this as I was sunning myself down under. In the end, we both lost money on the sale too, I had to borrow from my father, and my first foray into flat ownership ended less than spectacularly. A record I have repeated since!
But the hard part for my friend was that she had to deal with the unwanted flatmate, manage all the joint bills and finances and then sell the property all on her own. I stumped up the money to close out the mortgage but I would not get any brownie points for being away and leaving all the hard work to her.
So, when looking to purchase together, consider the exit plan! Or maybe just don’t buy a property with me!