na city where the average starter home costs about 12 times the average salary, it is little wonder that increasing numbers of buyers not blessed with a romantic partner or a huge salary are starting to explore co-buying.
But going into property partnership with a mate is a serious decision — co-buying involves all the same risks, compromises and problem solving that buying with a partner does. With one key difference.
If you buy a home with your soulmate, you might live happily ever after. If you buy with a friend, one day you will almost inevitably want to go your separate ways and you need to be prepared for that.
‘We were making good money but neither of us could buy on our own’
Olamide Soyemi and Cullen Farleigh have done more or less everything together since they met at university. Their best friend status was cemented by years studying creative advertising together, countless hours of Mario Kart, flat sharing and moving to London, where they now work together at an advertising agency.
When it came to buying a first home it seemed only natural that they do that together too.
And it was equally logical to this tech-savvy pair of content creators that they share their experience of co-buying on social media.
The response to their misadventures doing up a run-down terrace in east London has been huge. Their TikTok channel (@bricks.and.disorder) has picked up almost 800,000 followers and 11.7 million likes.
Soyemi and Farleigh, who are both 27, headed to London after graduating from Lincoln University and in 2019 they started toying with the idea of buying a place. “We were freelancing and making good money, but neither of us could buy a place on our own,” says Farleigh.
“Then a friend said he knew this really good mortgage broker who could get us a loan. Within a week we had a mortgage in principle.”
In early 2020, just before the pandemic first hit, they found themselves the proud co-owners of a £450,000 three-bedroom terrace in Waltham Forest.
“We thought it was nice, but the more work we did the more problems we found,” says Soyemi. “We had walls that were unstable, woodworm, rising steam, everything needed plaster boarding, the kitchen and the bathroom needed redoing.”
Their efforts to renovate the house form the basis of their online journey — over the past couple of years the house has been transformed, an extra bedroom added and they are now starting on the garden.
The work has kept them too busy to do the sensible thing and get a proper legal contract between them — a deed of trust — stating the exact terms of their co-ownership. “We do need to get onto that,” says Farleigh.
But for now the pair are happy growing their TikTok audience and planning for the future. This could involve renting out their spare bedrooms, they might try to buy another renovation project and, like all good influencers, they are exploring how best to monetise their fan following.
‘We are both single, and we just thought, Why not?’
Alice Ward and Amy King are another pair of old friends who decided to invest in bricks and mortar.
They had met as teenagers working at a Mexican restaurant in Camberley, Surrey and when King moved to London shortly after Ward, it seemed natural that the pair should become flatmates.
At the start of the pandemic they were living in a shared house in Forest Gate, each paying £550pcm in rent.
“We both had some savings and Amy just mentioned, randomly, the idea that we should buy a place together,” says Ward, 28, who runs a wine bar. “After that we kept on talking about it. We are both single and we just thought: ‘Why not?'”
Talking turned into house hunting and last year they went halves on a two-bedroom flat at the Feature 17 development in Walthamstow.
Through a combination of savings, a redundancy payout Ward got after the private members’ club she worked for closed down during the pandemic, and some inheritance cash which King, 28, a police officer, had been left, they were each able to put down £21,250 towards the £505,000 flat.
They split the mortgage and all other bills down the middle.
They also did the proper paperwork up front, signing a deed of trust which spells out their individual stake in the property and what would happen if one of them wanted to sell.
So far the arrangement has run smoothly. The only argument has been over what color to paint the living room (in the end they went with a navy feature wall). Ward is hopeful that their long-standing friendship will stand them in good stead when the more difficult discussions have to be had.
“We are very open with each other,” says Ward. “If one of us wants to go and live abroad, or one of us gets a partner, we will talk about it. But we have got a two-year mortgage and we are talking about getting a three-year one after that so I think we are looking at staying that long at least.”
‘We saw it as a business transaction’
When Nicole Green announced that she was going to buy a flat with her two BFFs, the reaction from family and friends was not optimistic. “I got so many people warning me off, including my parents,” she says. “They all said it was a risky idea to go into business with friends.”
Nevertheless, the trio of university friends — desperate to get out of London’s renting trap — were determined to go ahead.
When they started talking about co-buying, Green, now 36, had a good job with a public relations agency, but negligible savings. Her friends had each recently inherited money which meant that together they could cover a deposit.
They used a financial adviser to steer them through the process of taking out a joint mortgage and in 2014 they paid £600,000 for a three-bedroom flat in a converted office building above a pizza restaurant on Mare Street in Hackney.
The mortgage was split three ways — Green’s share was about £400pcm, substantially less than the circa £600pcm she had previously been paying for her room in Holloway — and living together was fun.
But, less than two years after they moved in, Green had met her now husband and wanted to move out.
“We were always acutely aware our circumstances were likely to change in the next few years, so we saw it as a business transaction,” says Green, who now runs her own business, Catch Communications. “It was a question of: ‘Can we spend less money on rent in the meantime?’.
Green moved out but kept the flat on for another couple of years until another of her friends also wanted to fly the nest. “The last girl was quite sad because she really loved the flat, but we had accepted that this was always going to happen,” says Green.
Unfortunately, Green and her friends had bought when London’s property market was soaring. Successive tax rises plus the uncertainty of Brexit over the next few years meant that when they came to sell in 2019, prices had flattened out.
They sold it for around £625,000, enough to retrieve their deposit and cover their selling costs, but nothing more. “I think that I broke even, which was OK,” says Green. “It was a much nicer flat than we could have afforded to rent, and I saved money on the rent. I don’t regret it for a minute and they are still my best friends.”
The golden rules for buying property with friends
- Before agreeing to buy a property with a friend, think seriously about your respective personalities. Also consider their money management skills — will they be able to pay the mortgage and bills every month?
- You’re going to have to have an honest conversation about financial stuff: how much you earn, how much you could put down as a deposit, what debt you have
- Be very clear about how your monthly costs will shake down. That’s not just the mortgage, but also things like building and contents insurance, service charge, council tax, repairs and maintenance
- Think about the future: if there are partners in the picture, how often do you want them staying over? What happens if one of you wants to move out and the other doesn’t? Agreeing ground rules upfront will make it easier to negotiate when circumstances change
- Setting up a joint bank account for mortgage and tax bills is a good idea. And keep a list of who owns what in terms of furniture and possessions — this will make life easier when you do go your separate ways
- Make sure you have a legal agreement between you, usually a deed of trust setting out exactly how much money you have all put into the deposit, how the property ownership is divided and how any profit will be split when you sell. This will be based on how much you are both investing and whether you are paying equal shares of the mortgage, and can be drawn up by your conveyancing solicitor. You can opt to become “tenants in common”, each owning a share of the property, or a joint tenancy where you co-own the property
- Some also opt for a cohabitation agreement, which includes rules on who will pay for bills and repairs
- It sounds morbid but you should also write a will detailing who will get your share of the property if you die. Most lenders offer joint mortgages to friends. Bear in mind that if your co-buyer defaults on a payment you will need to cover it or risk repossession
- Don’t assume you will recoup your investment when you buy a property — if prices fall or stay flat, you might end up losing a part of your original investment, particularly if you are forced to sell by a change in your co-owners’ life