WHAT TO CONSIDER WHEN BUYING A HOUSE WITH FRIENDS AS TENANTS-IN-COMMON

With home affordability a big issue and the high entry cost of becoming a home owner, we now look at the pros and cons of buying property with friends.

The most common way to buy a property with two or more people who aren't a married or defacto couple is through a tenants-in-common arrangement. This allows the property to be split any way - not necessairly into equal shares. Four people can buy a quarter each, or it can be divided in other ways.

It means your share of the property can be left to the person of your choice when you die. This is in contrast to a property owned under a joint tenant arrangement - usually by couples - where the property is held in equal shares. If one owner dies, their interest passes to the other onwer.

Two important points you need to cover is what happens if one owner wants to sell their share and what happens if an owner cannot meet the repayments.

The co-owner's agreement should also regulate the division of bills, housework and any joint household accounts.

If one owner wants to sell, it's common that they have to offer it first to the owners before selling it to a thrid party.

Consider also what would happen in the unlikely event of one owner dyiing prematurely. Also, what happens if one party loses their job and can't meet their share of the repayments? If you get the opportunity and want to buy out one of your partners, how is the share priced?

The co-owner's agreement should cover all the above, regulate the division of bills, housework and any joint household accounts and be drawn up or looked over by a lawyer and signed by all parties.

If neither of you have owned (or partly owned) a home in Australia before, you should qualify for the first home owners grant or stamp duty concessions but only collectively pick up $10,000 rather than each receiving it.