Buying Property with Friends: How to Do It Right
Co-Ownership Can Help You Enter the Market—But Plan Carefully
With property prices soaring, buying a home with friends can be a creative way to enter the market sooner. However, it’s also a complex financial arrangement that requires careful planning.
If you’re considering co-owning property, making informed decisions before purchasing can help prevent potential pitfalls down the track.
Establishing a Strong Co-Ownership Agreement
Define Your Goals & Expectations
Before jumping into homeownership together, be upfront about:
✅ Why you’re buying together – Investment or long-term residence?
✅ Financial contributions – Who’s paying how much?
✅ Ongoing costs & responsibilities – Mortgage, maintenance, and insurance payments
✅ Exit strategies – What happens if one person wants to sell?
📌 Put everything in writing—a co-ownership agreement is essential for protecting everyone’s interests.
Ownership Structures: Joint Tenants vs. Tenants in Common
Understanding Your Legal Rights
There are two common ownership models in Australia:
🔹 Joint Tenancy – Each owner shares equal ownership, and if one person passes away, their share automatically transfers to the others.
🔹 Tenants in Common – Each owner holds a specific share of the property, which can be passed to beneficiaries in a will.
For friends purchasing together, the tenants in common model is generally more suitable, as it allows individuals to own different percentage stakes in the property.
Example:
- Buyer A: Contributes $500,000 (owns 50%)
- Buyer B & C: Contribute $250,000 each (own 25% each)
📌 Key point: Even with different ownership shares, each co-owner has full legal access to the entire property.
Important Factors to Address in Your Agreement
1. Handling Maintenance Costs & Insurance
Specify how expenses like repairs, maintenance, and insurance will be split among owners.
2. Selling Ownership Shares
Owners can sell their stake in the property. But what happens if one wants to sell? Will other owners have the right of first refusal?
3. Rental & Tenant Considerations
If the property is rented out, decide how:
✅ Rent payments will be divided
✅ Tenant selection will be handled
4. What Happens if One Owner Moves Out?
If an owner moves out but retains ownership, the others don’t have to pay rent—as long as they don’t restrict the departing owner’s access to the property.
5. Estate Planning & Wills
Each co-owner must have an updated will stating who will inherit their stake in the property.
Get Expert Guidance Before Purchasing
Buying property jointly can be a great strategy, but the legal and financial risks mean expert advice is crucial.
At CBM Mortgages, our finance specialists can:
✅ Connect you with experienced conveyancers for your co-ownership agreement
✅ Help you structure your loan for shared ownership
✅ Ensure you secure the right mortgage for your situation
For more information go to our dedicated First Home Buyers page here or read one of our first home buyers blog posts here
📞 Contact us today to start your co-ownership journey the right way!
Disclaimer
This article provides general information only and does not constitute financial advice. Always consult a qualified financial advisor or mortgage broker to assess your personal situation before making any financial decisions.
Written by Craig McDonald 14/06/2025
