B46 - Buying a Home with Other People
You may be thinking of pooling your money with relations or friends to buy a home together.
This is a big decision. Buying a house is generally the biggest financial outlay you will ever make, and you will be entering in a contractual agreement with others (as well as
with a bank!).
You will have financial and legal obligations, and you need to consider what will happen to your share of the property if you die or your circumstances change.
You may consider buying a home with others for any number of reasons, for example, for company or reassurance, to help your finances, to help a family member into home ownership,
or because a disability or ill health means you need more support with your day-to-day living.
Regardless of your circumstances or who you decide to live with, you might like to think about having a written agreement with them that covers such things as splitting bills and
sharing housekeeping tasks and how insurance and repair costs will be handled. A written agreement might also cover what happens if you should change your mind - it will give you an
exit strategy if things don't work out. This is quite common and is called a co-ownership agreement.
Even if you don't have a written agreement, you need to agree on some ground rules before anyone moves in. You might also benefit from creating opportunities to regularly (eg,
every second month) check how the rules are working for everyone and whether you need to revise any.
You will need to be flexible and willing to deal with problems calmly and openly when buying a house with others. Having some ground rules that can change as you get to know each
other can help build shared understandings, expectations and trust as you adapt to living together.
- There may be financial benefits in sharing the cost of buying a house together with others. It may give you more options in terms of where and what you can buy.
- There are advantages in sharing the costs of running the home, such as sharing repairs and maintenance costs, utilities costs, rates, insurance, etc.
- Sharing a home together provides companionship and support.
- If there is a mortgage, everyone is liable for the repayments if one person defaults.
- Inevitably living with others results in problems or disagreements. These will need to be managed and resolved.
- It may be more difficult to move away from a shared house in which you have an ownership interest, than if you were in a renting or boarding situation.
- Talk to your bank and solicitor about the different types of ownership contract that are possible (eg, joint tenancy or tenants in common) as these have very different legal
implications. Also seek advice on the practicalities, responsibilities and legal and financial obligations of buying a house with others.
- To protect your own interests, it's essential that you obtain advice from your bank and solicitor separately from the other person/people you are intending to buy a house with.
- There are some useful guides and checklists for buying and selling a home, available from the Home Owners and Buyers Association of New Zealand (HOBANZ), Citizens Advice Bureau
(CAB) and Consumer.
- If you are using a real estate agent, make sure they are fully licensed.
- You should always get a pre-purchase inspection report on the home you are thinking of buying. This is an independent building report on the condition of the house and any
defects or issues. An independent building inspector or building surveyor produces the report.
- You should always get a property title search to ensure there are no problems with the title and a Land Information Memorandum (LIM) report from your local council, which
provides information about the site and the building.
- Increasingly, interested home buyers are having prospective properties (especially ex-rentals) tested for contamination from the manufacture of the drug methamphetamine (also
known as meth or P).
- Use the Good Homes for Good Lives checklists to assess the resilience of the building design, materials and site (see:
What do I need in order to take this option?
- You need the funds and the right home to be available.
- The people you want to buy the home with must be willing and able to enter into home ownership with you.
- You need to be sure that the person or people you want to live with will be respectful, kind and supportive of you and won't take advantage of you.
Could this option limit my future choices?
Yes, this option could affect future decisions about your finances and living arrangements.
For more information