Buying a house is an exciting time. It can represent the next step in a relationship. Or in some cases friends or siblings may choose to buy together so that they can pool financial resources to get onto the property ladder.
If you choose to buy a house with someone else, your solicitor will ask you both to consider carefully how you want to own the property. This includes thinking about how you might feel if the relationship breaks down in the future, or one of you decides they want to move on. Having those conversations now could help make a difficult time in the future much easier to manage, and provide clarity at a time when many other things may feel uncertain.
So, before you sign on the dotted line together, talk about the following:
- If one of you were to die, how would you want your share of the property dealt with? There are two ways to own a property – as ‘joint tenants’ or ‘tenants in common’. If you own as ‘joint tenants’, then if you die your share of the property will pass straight to your co-owner. This might be the right option if you are partners and want to make sure that your partner will be able to stay at the property after your death; but it may not be the right decision if, for instance, you had children from a previous relationship and you would like your share of the property to pass to them. If you choose to own as ‘tenants in common’, then you can leave your share of the property in your will to whomever you choose.
- How would you feel if one of you decided you wanted to move on, but the other was not ready to yet? This is particularly important if you are buying with friends and family. Circumstances change, and one of you may decide they need to release their investment in the property. Speak to your solicitor about this – they can draw up an agreement which would set out a process that you could both follow which would include an option for one of you to buy the other out of the property, and how their share in the property would be valued fairly.
- Are you both contributing the same amount – both in terms of the initial deposit, and in terms of ongoing bills, or any renovation work? If you are contributing differing amounts at any time you may want this recording, so that on any future sale of the property the proceeds can be shared amongst you in accordance with the amounts you both put into the property. This can be done in a ‘declaration of trust’ which your solicitor can prepare for you. Without a declaration like this, the assumption is likely to be that you own the property equally between you, regardless of how much you actually contributed.
Having these conversations now will mean you both buy the property knowing what each other’s expectations are, and safe in the knowledge that you have discussed and agreed how you would deal with any future disagreements.
Poole Alcock would be happy to help you. If you are buying a property, call us on 0800 470 0334.