Joint Home Ownership

Private Property South Africa
Anna-Marie Smith

Joint home ownership can speed up entry into the property market for first time buyers.To buy a house with friends or family members for the purposes of daily living, or not to buy at all, is the question asked by an increasing number of young people, ready to leave home but unable to meet the onerous financial demands of home ownership. High cost of living, plus average house prices now in excess of R800 000, are major reasons for lending institutions claiming that first time home buyers are on average over the age of 30.Those not in a financial position to enter the property market that requires cash deposits, regular income, and surety such as life insurance, are left with little option than to stay in the rental market for longer, without the prospect of longterm investment returns.Joint ownership of properties, where buyers utilise their investment as a living space, with the prime purpose of saving on living costs, is becoming an increasingly popular phenomenon. Banks and property professionals say joint ownership should be seen strictly as an unemotional, business transaction, where the financial circumstances of all partners concerned are communicated transparently. Where daily and monthly costs are considered part of such a relationship, joint owners can reap the benefits in a very short time, and by taking advantage of SA low interest rates, even the smallest over payment on bonds will pay considerable dividends in the longer term. Saul Geffen, CE of ooba bond originator, says potential buying partners need to ensure that their goals and finances are aligned, and every aspect agreed upon is covered in a formal contract.“This will make future dealings far simpler as, hopefully, any possible conflicts have been discussed before they become an issue and the presence of a watertight contract will safeguard against any one party backing out at a later stage.” said GeffenWhile entering into such a partnership in a legally binding fashion is essential, so is the provision for any party to exit such a contract. Experts say the most important piece of advice to future joint property owners is to consider the worst possible case scenario. Provision should be made for a shift in individual circumstances, such as loosing a regular income, or in the case of death where a will is required.Mostly, it is transparent, open relationships which withstand such contracts and experts say key advice from the estate agents industry includes shopping around for a mortgage specifically designed for joint ownership, and a bank who is willing to go the extra mile in customizing such a transaction. They advise buyers to keep paperwork in order by ensuring documents are accessible to everyone, and to ensure each item is signed by all the co-buyers. Another option is for joint owners to consider making mortgage and bill payments such as rates and taxes and electricity, from a joint bank account, rather than making it the sole responsibility of one owner.Finally, keep the arrangement as uncomplicated as possible, and draw up an inventory of items being brought into the house and who owns them, to avoid confusion in the case of a partner moving out.

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