Purchase with friend

bigslick · 22-02-2019 12:37pm #1

A friend and I are considering buying a house together as renting is becoming harder due to having been moved around a few properties in recent years due to 'Refurbishments'.

We are both on professional salaries and combined we would be able to get a good mortgage amount. However where we differ is amount of deposit, he has effectively 5-10k where I would be lucky enough to have closer to 50-60k to contribute. If we were to go ahead and look to purchase would we split equity based on deposit contribution? Or if I was to buy house on my own (using only my deposit) but utilising their salary with the banks to get a higher mortgage, would there still be a requirement to have both names on deeds?

Naturally is touchy subject and am not looking to do anything underhanded, but just want to ensure that the potential difference in contribution to house doesnt end up costing me in the event of any future sale.

Thanks

godtabh · 22-02-2019 12:38pm

Look at the horror stories here from celctic tiger era situations similar to yours. I wont do it.

DublinDilbert · 22-02-2019 12:40pm

bigslick wrote: »

A friend and I are considering buying a house together as renting is becoming harder due to having been moved around a few properties in recent years due to 'Refurbishments'.

We are both on professional salaries and combined we would be able to get a good mortgage amount. However where we differ is amount of deposit, he has effectively 5-10k where I would be lucky enough to have closer to 50-60k to contribute. If we were to go ahead and look to purchase would we split equity based on deposit contribution? Or if I was to buy house on my own (using only my deposit) but utilising their salary with the banks to get a higher mortgage, would there still be a requirement to have both names on deeds?

Naturally is touchy subject and am not looking to do anything underhanded, but just want to ensure that the potential difference in contribution to house doesnt end up costing me in the event of any future sale.

Thanks

You buy and rent him a room, this will allow him save a larger deposit for his own purchase, also your not taxed on the rent a room income. Much simpler in the long run. Win win, he gets the stability of renting from you and allow him to save more.

professore · 22-02-2019 12:42pm

You have to work out the details among yourselves. If you are planning on paying equal repayments it's hardly fair to split based on deposit contributions as the deposit is only 5% - 10% of the purchase price, and a much smaller % of the overall cost - you will pay at least double the purchase price over the life of the mortgage.

However you should get more equity than him, no question. Probably a 65 / 35 or 60 / 40 split sounds fair. You could make a separate arrangement that he pays you back 1/2 the deposit over time and give him 50/50 once it's paid.

A solicitor needs to be involved here. As others have said, any arrangement has to be legally watertight, with penalties for breaking it.

professore · 22-02-2019 12:43pm

DublinDilbert wrote: »

You buy and rent him a room, this will allow him save a larger deposit for his own purchase, also your not taxed on the rent a room income. Much simpler in the long run. Win win, he gets the stability of renting from you and allow him to save more.

I suspect the OP wouldn't get a mortgage on their own.

is_that_so · 22-02-2019 12:47pm

bigslick wrote: »

A friend and I are considering buying a house together as renting is becoming harder due to having been moved around a few properties in recent years due to 'Refurbishments'.

We are both on professional salaries and combined we would be able to get a good mortgage amount. However where we differ is amount of deposit, he has effectively 5-10k where I would be lucky enough to have closer to 50-60k to contribute. If we were to go ahead and look to purchase would we split equity based on deposit contribution? Or if I was to buy house on my own (using only my deposit) but utilising their salary with the banks to get a higher mortgage, would there still be a requirement to have both names on deeds?

Naturally is touchy subject and am not looking to do anything underhanded, but just want to ensure that the potential difference in contribution to house doesnt end up costing me in the event of any future sale.

Thanks

As others have suggested work out a deal and get it drawn up by a legal eagle. I'd also consider other relationships you both would have outside the home, in how you structure it and how the end of the financial deal would be resolved.

PhoenixParker · 22-02-2019 12:52pm

Your wording "naturally is a touchy subject" suggests to me this is a bad idea, even with the tightest legal agreements.

You need to be able to communicate with your purchasing partner clearly, effectively, without fear or defensiveness.

If the most basic discussion about how to split ownership is already a touchy subject, that does not bode well for the future of your business or house sharing relationship.

lawred2 · 22-02-2019 12:57pm

Do not do it.

Let's see you or your friends circumstances change outside of your control and you or they lose income? You will be jointly liable for the mortgage - not separate liable.

What happens if one of you finds a partner? They going to move in? Try to buy the other out?

Everyone's life moves at different speeds.. you may be in the same 'place' now but even 12 months later, it could be entirely different.

Jesus you could plain and simply just fall out and now you're both stuck.

Avoid such an arrangement like the plague.

One poster suggested making one of you a licencee - that's about the best suggestion

Amirani · 22-02-2019 12:59pm

Join ownership of property with a friend is almost always a terrible idea I've found. I'd advise exploring other avenues.

fletch · 22-02-2019 1:41pm

Don't even consider it.

I bought with a partner. I paid full deposit, he promised to pay back half.

Queue 7 years later, we split. I move out, he loses job, stops paying his half of the mortgage payments. Still not paid me back the half of deposit. I have to pay the full mortgage while he lives in house for free and I'm back in my parents place. He then refuses to allow the house go up for sale. I have to issue Circuit Court proceedings to force the sale.

You think it won't happen to you. It could.

Zamboni · 22-02-2019 2:46pm

I know renting it tough.
I know trying to get a mortgage is tough.
Keep on fighting the good fight.

But - Do not do this.

The Enbalmer · 22-02-2019 2:48pm

The worst ship that ever sailed is a partnership

the_syco · 22-02-2019 2:59pm

bigslick wrote: »

We are both on professional salaries and combined we would be able to get a good mortgage amount. However where we differ is amount of deposit, he has effectively 5-10k where I would be lucky enough to have closer to 50-60k to contribute.

So, same salaries, but you can save better? Who's idea was it to join up?

lawred2 · 22-02-2019 3:17pm

Would you hand this person 30k in cash? With no strings attached?

That's effectively what you would be doing when paying their share of the deposit. Hard to believe for a second that you are entertaining this.

fletch · 22-02-2019 4:13pm

You've already saved a substantial sum...keep doing as you are doing and you might be in a position to buy a lot sooner than you think.

DublinDilbert · 22-02-2019 4:46pm

professore wrote: »

I suspect the OP wouldn't get a mortgage on their own.

They mention they are professional and have saved €60K, that should enable to buy something. I would guess that purchasing together could put them into a bigger house or better area etc, but IMO it wouldn't be worth it. I would rather rent a room from a friend than a stranger.

PauloMN · 22-02-2019 4:51pm

Even if both parties were going into this with everything being a 50/50 split, it's a risky enough move. Going in with the complexity of different deposit amounts is an absolute no-no in my opinion, and is asking for trouble. I agree with the other posters on this, avoid at all costs.

bigslick · 22-02-2019 5:01pm

DublinDilbert wrote: »

You buy and rent him a room, this will allow him save a larger deposit for his own purchase, also your not taxed on the rent a room income. Much simpler in the long run. Win win, he gets the stability of renting from you and allow him to save more.

My buying power would naturally be more with inclusion of him in the mortgage, however I understand this is not a reason to do it.

professore wrote: »

However you should get more equity than him, no question. Probably a 65 / 35 or 60 / 40 split sounds fair.

This would be how I would have thought to do it, to just do a straight equity split and should any issues arise in future where house needs to be sold, it is clear the ownership

PhoenixParker wrote: »

Your wording "naturally is a touchy subject" suggests to me this is a bad idea, even with the tightest legal agreements.

You need to be able to communicate with your purchasing partner clearly, effectively, without fear or defensiveness.

If the most basic discussion about how to split ownership is already a touchy subject, that does not bode well for the future of your business or house sharing relationship.

Is not so much that it is a touchy subject but perhaps more so I understand he has been trying to put together a deposit but has had several bereavements and other health issues which have limited this, and I tend to avoid conflict as a whole

the_syco wrote: »

So, same salaries, but you can save better? Who's idea was it to join up?

Well I earn about 30% more than him but both on good salaries in good sectors. Ive managed to save more due to a few good years of bonuses and also watching my cashflow. Was joint scoping really, so isnt him pushing this idea at all.

Thanks to all for comments and feedback. General consensus seems to be to not to to go down that avenue, which seems to be the way to go. Would hate to have any issues down the line and be worried should he, as other posters here have said, lose his job, get married etc and walk away from house.

Guess does make me think how others handles a similar situation with their GF/BF who are looking to buy. I imagine head down and keep saving and buy 50/50.

GingerLily · 22-02-2019 5:33pm

bigslick wrote: »

Guess does make me think how others handles a similar situation with their GF/BF who are looking to buy. I imagine head down and keep saving and buy 50/50.

The difference is, when you buy as a couple your generally hoping in the future that you'll be sharing all your assets.

What is going to happen with a property you buy with a friend in 10 years?

If your get nice bonuses, you'll probably want to pay off chunks of your mortgage, you can't really do that if your in a financial arrangement with a friend.

Buy a house or apartment and rent a room, up to 14k a year, tax free. Its by far the smartest option for you if you want to buy.

Klonker · 22-02-2019 8:05pm

Agree with others here, best thing to do is buy a 2 bed yourself and rent him a room, you can give him a friends rate of say 20-30% below market value. He can't complain about that.

Interested Observer · 22-02-2019 8:48pm

bigslick wrote: »

Guess does make me think how others handles a similar situation with their GF/BF who are looking to buy. I imagine head down and keep saving and buy 50/50.

I don't think this is at all comparable to buying with a friend. You don't share your assets with your friend. If you go ahead with this, sooner or later one of you is going to get to the point where the arrangement doesn't suit anymore. Be it one of you meets a partner, decides you want kids, gets a huge boost in salary, get offered a job in Singapore, etc. And I think you're nuts if you do anything but go in on a 50/50 basis.

the_syco · 23-02-2019 8:55pm

bigslick wrote: »

Is not so much that it is a touchy subject but perhaps more so I understand he has been trying to put together a deposit but has had several bereavements and other health issues which have limited this, and I tend to avoid conflict as a whole

bigslick wrote: »

Guess does make me think how others handles a similar situation with their GF/BF who are looking to buy. I imagine head down and keep saving and buy 50/50.

The difference between mates and loved ones, is that if the loved one loses their job, you'll support them until they get back onto their feet.

If your mate gets ill, and can't pay their share or the mortgage, I doubt you'll be fine with them not paying their share.

Also, if one of you gets a partner that you want to marry, one of you will need to buy out the other.

ldy4mxonucwsq6 · 24-02-2019 2:38am

You don't have to look far in this forum to see how people have run into problems with what you are considering.

Would strongly advise against this, anyone I know who has done this has ended up badly.

Tough it out for another while and then get your own place, you'll be glad you did.

Think forward 5 or 10 years, what will you think about having a mortgage (not a house, a mortgage) with your friend then?

What if they meet someone or you meet someone, can you agree and afford to buy each other out? What if you want to sell in the future and they don't? If both aren't in agreement you'll end up in court and much less well off financially as a result.

LawBoy2018 · 11-10-2020 6:33pm

Can we bring this thread back? I would be very interested to hear people's thoughts.

Would buying a 2 bedroom apartment with a friend as tenants in common be such a bad idea?

Padre_Pio · 11-10-2020 6:41pm

LawBoy2018 wrote: »

Can we bring this thread back? I would be very interested to hear people's thoughts.

Would buying a 2 bedroom apartment with a friend as tenants in common be such a bad idea?

Buying anything with someone who you have no hold over is a bad idea. Someone needs to be able to unanimously make a decision.

Couples buy together as it's understood they will live in the house together indefinitely.
But two friends will rarely live together when one finds a partner, so what happens then?

11-10-2020 6:42pm

LawBoy2018 wrote: »

Can we bring this thread back? I would be very interested to hear people's thoughts.

Would buying a 2 bedroom apartment with a friend as tenants in common be such a bad idea?

Did you read the thread?????

LawBoy2018 · 11-10-2020 6:45pm

bubblypop wrote: »

Did you read the thread?????

I did! I would love to discuss it further though. There didn't seem to be anyone in the thread who had actually bought a property with their fried, bar one poster who bought one with their 'partner'(?), I'm not sure if she/he meant like a business partner/friend or an actual partner.

xl500 · 11-10-2020 6:49pm

Don't do it recipe for future woes

LawBoy2018 · 11-10-2020 6:51pm

Padre_Pio wrote: »

Buying anything with someone who you have no hold over is a bad idea. Someone needs to be able to unanimously make a decision.

Couples buy together as it's understood they will live in the house together indefinitely.
But two friends will rarely live together when one finds a partner, so what happens then?

What do you mean by 'hold over'? Isn't that what contracts are for? But I take your point.

Yes, I agree. That would definitely need to be discussed straight away. Would banks even consider it though? Especially in light of the current circumstances.

I would be more interested in buying a property as an investment, rather than one to live in tbh. Would it be best to set up an Ltd company? That way we could claim back any capital allowances available from renovations against rental income, if we were to rent it out. We could also claim back mortgage interest, management fees, etc. We wouldn't necessarily need to set up a company to do that, but it might be less risky.

Markcheese · 11-10-2020 7:08pm

Just to confuse the issue , if everyone goes in eyes open and with everything written down and agreed , why not ..
I mean if you buy a house with a romantic partner ,you can't really bring up "what if we split " and if married well what ever was agreed pre purchase is null if there is a split ... (And get that's the "accepted way ", to joint buy a house ...
But be aware of the probs what if one party's girlfriend moves in ,and that causes a prob ...
The get out clauses , !! 1 party really wants to keep the house , how do you agree a price / value ...
How much time do ye have to sell ? ( A distant family member was forced to sell a property he "got" from family members , so sold it during a bank strike ) ( long time ago )
What if there's negative equity ?
**** it ...who gets the ",big room "

MissShihTzu · 11-10-2020 7:10pm

No. Absolutely not. It will be a recipe for disaster. No matter how well you get on...

Purchase with friend

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