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What is co-buying?

What exactly is co-buying, we hear you ask. It is defined as buying something with another person/people. If you type 'co-buying' into a search engine it will retrieve a number of examples, co-buying electrical goods, co-buying boats and co-buying property, amongst others.

Propertyfriends is a property co-buying website, a concept which has been around for some time now. However, since February 2006 property co-buying has gained a lot of interest amongst first time buyers and caused much media attention. Friends and family have been co-buying property together for years and now it is becoming increasingly popular for people to meet on introduction websites, similar to Propertyfriends, and purchase property together.

In fact the property co-buying concept is becoming so popular that lenders are introducing mortgages to suit this 'new' way of buying property. HSBC has been advertising their co-buying mortgage, referred to as a 'friends' mortgage, since September 2006. Amongst the benefits listed, HSBC will lend money to up to 4 people, allowing individuals to share the cost of buying and will also consider lending up to 100% (maximum £250,000) to those who have graduated from university within the last five years. In addition, there is a HomeStart repayment option of paying less for the first three years with no upfront fees incurred. Doesn't sound bad, does it?

Why would I consider co-buying?

There are many reasons to consider co-buying and we have listed just a few below. If you would like to learn more, click on the links to go through to our Buy Together page for more information relating to each point:

• Buy Together
• Multiply your buying funds
• Bigger pot of money to spend so you can now afford to live in a better location
• Bigger property, more space, room to move...
• All costs will be shared equally - solicitor fees, surveyors, valuations, mortgage fees and payments, maintenance, repairs, furniture, bills etc.
• Buy now, not later - buy today and not one day...
• Spread the risk - joint ownership means joint risk
• Not sure how to go about it all, well you don't have to do it on your own

Why buy at all?

• Enjoy the benefits of owning your own home and for those who are not first-time buyers adding another property to your growing portfolio
• Peace of mind - you don't have the worry of, for example your landlord selling the property you are living in or the tenancy agreement not being renewed
• Let your money grow! Homes will usually increase in value over a period of time so you will be profiting from living in your own home
• Become the Landlord and pay off your own mortgage

How long should I expect to co-own for?

This is something you will decide with your co-buyer/s and will depend on your circumstances. We recommend owning a property for no less than two years to allow sufficient time for your property to increase in value.

Co-buying is a step onto or up (for some) the property ladder and we envisage it to be a short-term solution. Over time, most co-buyers will want to sell up and go their own way eventually. The property should have increased from a rising market and by paying a little off your mortgage each month you will have decreased your debt.

How do I know who my ideal co-buyer is?

Propertyfriends is a community of members, all looking for their ideal co-buyer, or propertyfriend, as we like to refer to them at Propertyfriends. An ideal propertyfriend is someone you would consider to be a good business partner, someone you would feel comfortable living with, someone you would see yourself communicating easily with - there are many factors to consider when finding an ideal propertyfriend.

Before starting your propertyfriend search, ensure you have created your profile in full to help you get clear in your own mind what it is that you want for yourself and from your ideal propertyfriend. This will make the propertyfriend search clearer for you in the long run and you won't waste time corresponding with members who you may decide are not suitable.

Take a look at our Safety Tips page which details things such as meeting in a safe place, watch for red flags, details credit checks and more to help you find your ideal propertyfriend.

Ch@t to others online and find out how they are looking for their ideal propertyfriend. After all, this is the reason for being a member of Propertyfriends; to find someone you might consider buying a property with. So get out there, start chatting to people and ask the questions you want answered.

How do I know what my ideal property is?

If you are a first-time buyer, you may not know what type of property you would like to live in, so it is a good idea to do some research. Have a look online, take a walk around to see which properties visually take your fancy, speak to people who own properties, borrow books from the library...

Register with online property portals such as Rightmove and Findaproperty and create an account. Register free to access for sale prices, compile property shortlists and receive email updates. Simply register your details and fill in the search criteria for properties you may be interested in. You will then be sent an email matching properties to your criteria as and when they become available. Once you've viewed the property details you can add them to your shortlist saving the property in your account to view again at a later date.

Another useful tool is our Property Buying Tips page, which helps you to make a list of search criteria - what type of property are you interested in, in which area, how many bedrooms, would you like a garden or off-street parking? You must be clear on what you will be willing to compromise on and what is essential, that which you will not compromise on. Once you have decided on a propertyfriend all of this will become much clearer!

Is co-buying the answer to affordable home ownership?

The answer to this question is simple - yes. Many, many people cannot afford to purchase property on their own in this current market and with ever increasing house prices many first-time buyers are priced out ofeposit the market. With mortgage companies adding higher lending charges to those who can't afford a 10% deposit and charging hefty fees therefore increasing the amount you will be required to borrow.

In some areas of the UK a modest home now costs a staggering six times the annual income of a person in their twenties and thirties (Joseph Rowntree Foundation, 2006). New research by the Halifax suggests that property in nine out of ten British towns is now beyond the reach of first-time buyers. "Up to ten per cent of first-time buyers are having to club together with friends or family," says Firstrungnow.com

"Around 50 per cent of new first-time buyer mortgages go to couples buying together, some 40 per cent of new mortgages are lent to people buying alone and the remaining 10 per cent go to people buying with friends, taking on shared ownership or involving parents as guarantors" says Halifax.

Average incomes have risen by 50 per cent but Nationwide Building Society research shows that house prices have trebled since 1995 - trebled! No wonder people are asking parents to guarantee loans, are taking advantage of government funded affordable housing schemes and buying with friends. If you aren't able to go down any of these avenues and you are interested in buying a share of a property then property co-buying could be for you.

Reasons to co-buy: Your deposit is too small, you have been trying to get on the property ladder for some time but have been unsuccessful, tired of renting and paying off your landlord's mortgage, would like to start increasing your equity through a rising property market, you consider it a good first step on to the ladder if you can't afford to buy on your own, get to move out of your parents house, have the freedom to decorate and do what you want to the place, have a sense of ownership by joining the home owner market, you're investing in your future and it's a step to owning your own property.

What things will I need to think about when co-buying?

To ensure your co-buying journey goes smoothly, you will need to ensure you:

• feel comfortable with your chosen co-buyer - can you live with them, can you communicate well with them, do you trust them?
• have the legal documentation drawn up properly by your solicitors - Deed of Trust, Cohabitation Agreement and your individual Wills
• have discussed setting up a joint account for all expenses, bills and payments
• have agreed how much deposit will be paid by each co-buyer
• have agreed what share of the mortgage each co-buyer will pay
• have agreed how the profits of the property will be split upon sale
• have discussed insurances including mortgage payment protection , including building and contents insurance and including life insurance
• all understand what stamp duty is and when it will be paid
• have discussed what will happen if one of the co-buyers die
• have discussed all costs relating to the purchase, sale and upkeep of the property including stamp duty, solicitors fees, surveyor costs, mortgage fees, estate agents fees, general bills, council tax, ground rent and service charges (if required)
• have discussed what will happen if one of the co-buyers stops paying their share of the mortgage
• have agreed where the money will come from for any maintenance of the property - new boiler, painting of the property etc.
• have agreed if one or more co-buyers were to move out and you were to have a lodger move in you will need to think about how this will work
• have agreed how long you will stay in the property and have it written into the contract

Your decision on the aforementioned will be written into your Deed of Trust and Cohabitation Agreement, standard documents your solicitor can supply.

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