Is co-ownership for you?
It is no secret that buying property in Auckland is very expensive. Despite recent media attention of falling house prices in Auckland and the property sector becoming “a buyer’s market”, Barfoot & Thompson recently reported that the median prices for houses it sold in June were 2% higher than their May numbers and 3.5% higher than the median house prices in June 2021.
In order to get a foot on the property ladder, some house hunters are getting together with family and/or friends and pooling their money to give them greater buying power. Co-owning a property does not always mean that the parties will be living together under one roof, but for others, like the clients we have recently helped to purchase their first home, this meant that two married couples and one toddler would be living under one roof for the foreseeable future. While the box for home ownership can get a big tick, what does this actually mean where co-owners are living together? Will they be able to live together in perfect harmony in the way that Stevie Wonder and Paul McCartney envisaged in their song? Or will dark clouds roll in?
Before two or more parties commit to each other, they need to consider the potential issues that may arise and decide how they will be dealt with up front. This will help them to clearly identify and manage each other’s expectations and ensure that everyone is on the same page as they start this new venture together. One way to do this is to enter into a property sharing agreement. This type of agreement can set out clear ground rules about how the costs of the property will be shared (home loan, utilities and maintenance etc) and what is to happen if one or more of the parties decide to go their separate ways. With a good property sharing agreement in place, it removes assumptions and minimises the risk of disagreements that could potentially derail relationships between co-owning parties.
The same principle also applies to co-owners who do not live in the same house. Having clearly recorded expectations and understandings will help you to co-own the property without unnecessary and costly disputes or disagreements. Non-occupying co-owners will also have to consider the implications of the brightline rules for their situation.
Co-ownership is not suited to everyone but if you think it might be, then before you purchase you and your co-owning partners should discuss the various issues you may face and agree as to how you intend to address them as and when they arise. With the assistance of a good property sharing agreement you can be reassured that you are all on the same page and your co-ownership is based on a clear and solid mutual understanding.
The Property Team at Schnauer and Co are here to help you with all your property questions. So call us now for a confidential, no obligation chat and let us help you decide whether co-ownership is right for you.