Entering the property market with a close friend or family member is a dangerous idea, according to a GlobalX survey of Australia’s top legal professionals.
The latest research by legal technology experts GlobalX of 170 legal professionals found 45 per cent of lawyers and conveyancers would not recommend purchasing property with family or friends.
GlobalX CEO Peter Maloney said as savvy buyers search for creative ways to enter the property market, many have turned to solutions such as ‘co-buying’ and ‘rent-vesting’ but these decisions could be damaging in the long term.
“Co-buying allows buyers to split the cost of purchasing a property, making it popular with first-home buyers struggling to save for a deposit,” Mr Maloney said.
“It means that buyers enter the property market sooner, increase their buying power, and reduce their financial commitments – but when it doesn’t go to plan, can rupture friendships and ruin families.”
Mr Maloney said he wasn’t surprised by the survey’s findings, as lawyers and conveyancers often witness property disputes first-hard.
“Legal professionals are the ones on the front line when things turn sour – they witness the disputes first-hand when plans change, and when friendships fall out,” he said.
“These findings highlight that, as with any property purchasing decision, it’s important to seek professional advice on your specific situation before entering into a contract.”
As the housing affordability crisis continues, co-buying is rising in popularity, with one 2017 survey revealing that 41 per cent of singles would need support from their family to purchase property.
First Class Legal Principal and property lawyer Leonie Jarrett said many legal professionals were skeptical of the idea, having seen countless relationships damaged because of deciding to invest together.
“It’s common for relationship dynamics to change as time goes by, such as one buyer getting married and wanting to sell the property to purchase a family home,” Ms Jarrett said.
“If the other owners want to hold onto the house, their only option is to buy out the other person’s share of the property, which they may not be able to afford.”
Real Estate Institute of Australia (REIA) President Malcolm Gunning said as an industry, buyers were looking for alternative arrangements that made the process of entering the market quicker.
“Buying a first home is a big milestone, and with the rising cost of housing, it’s no wonder people are being inventive about the ways they can make it happen sooner,” Mr Gunning said.
“But, like any thorough due diligence, it’s important that all parties are clear about their expectations of the sale, including how costs will be divided if things turn sour, and put this in writing from the start.”
“It’s easy to get caught up in the excitement of purchasing a property and assume that it will be smooth sailing – but property is a long-term investment and a lot can change five or ten years down the track.”