While property pricing and market conditions favour buyers, many are still struggling to meet the lending criteria of financial institutions. In light of this, many buyers are choosing to partner with a friend or family member to purchase property together, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
In today's property market, co-ownership has become an especially attractive option as the shared costs make it a much more affordable venture.
Although some banks no longer offer joint cheque or savings accounts; Goslett says that due to the vast number of buyers who are choosing to co-own with another party, many lenders do offer joint home loan accounts or mortgage packages that cater specifically for this situation.
"There are definitely advantages of buying property with a partner, such as the greater prospect of finance being approved as well as the possibility of obtaining a bond for a higher amount. Additionally, there is the benefit of a reduced individual financial commitment as all costs during and after the purchase process are shared. Both parties can contribute to the deposit, transaction costs, bond repayments, as well as the maintenance and utilities bills," says Goslett. "However, it is important that co-ownership is handed in the correct manner and that all aspects are discussed before any transaction has been concluded. It is advisable that there is an agreement in writing that is signed by both parties, should any dispute arise in the future."
Goslett notes that some of the points that should be discussed and agreed upon between the parties are aspects such as what each one wants from the venture, how long they plan to live together, and what happens if one wants to sell their share of the property in the future. The future plans of both parties will have a major impact on the partnership and how viable it is.
Each of the respective parties will have to be in agreement with regards to their expectations as well as their individual responsibilities. "Along with the shared costs, also comes shared responsibility. To protect both co-owners, each partner should keep a record of all documents and payments made that relate to the property they jointly own. If one person defaults on any of the payments, all partners will be held liable. It is for this reason that choosing the right person to buy property with is so important and should be considered carefully. The relationship must be based on trust and each partner should be open and hones with the other. All financial matters or difficulties that could affect the property should be discussed, so that they can be dealt with appropriately before a problem arises. For precautionary measures each partner should also have a will drawn up that addresses what will take place should anything happen to either party," advises Goslett.
He notes that those who want to purchase property with a partner have chosen the right time to do so. "The conditions in the market such as ideal property pricing and low interest rates have given rise to many opportunities in the property sector.
Through sharing the deposit and bond repayments, those who are unable to show the necessary affordability on their own, can still take advantage of the current buyer's market by investing with a trusted partner," Goslett concludes.
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