How to successfully buy a home with a stranger

30 years ago the thought of buying a home with a stranger may have been something that no one would consider seriously. Now with home ownership on the decline and property prices at record breaking levels, first time buyers are teaming up with other like-minded buyers they've met online to get their foot on the property ladder. 

In the Housing Survey Report for 2014-15 provided by the Office for National Statistics, figures show that home ownership has fallen from 71% in 2003 - the highest recorded percentage ever for the UK - to 63% in 2014-15; and for first time buyers, numbers fell from 815,000 in 2005 to 564,000 in 2015.

It is easy to see why with average house prices are keeping first time buyers off the property ladder. In London in 2003 the average price was £207,162, whereas in August 2016 it is £488,908. Salaries however have not been able to keep pace with this growth so now first time buyers are moving to joint ownership to make buying a home affordable. 

Sharing with friends, partners and family has been commonplace for years but it is now becoming increasingly common to find first time buyers looking to share with other like minded first-time buyers who they don't yet know.

What is a stranger?
A stranger is simply someone you don't know or are not familiar with, in simple terms, despite the word often having negative connotations.

If, however, you interact with a stranger because you both want to buy a home and neither of you can do so on your own so you are looking to combine forces with another suitable person, this joint purpose alone gives you much in common already. 

You can reasonably safely presume, for example, that the stranger who shares your aspirations has at least scoped out what the home buying process is and what they can - and can't - bring to the table.

Most importantly, unlike the more traditional model of buying a home being an accompaniment to getting married and perhaps starting a family, it should be clear that your arrangement does not have to be seen as a very long term investment. Many, for example, aspire to buying together, seeing out the early repayment charge period (normally 2 or 3 years) and then, depending on the buoyancy of the market, selling to realise a profit which may, for example, be put towards a bigger deposit used to buy a new property.

Are they really strangers?
The process of getting to know someone when looking to buy a home with them is similar to that which millions of people experience when meeting new people through internet dating - you don't go straight to marriage! It is important to find out:

Tick Do you have similar living habits?

Tick Are they looking to buy in the same area as you?

Tick Do your affordability numbers add up?

TickAnd - most importantly - could you live them?

This process of getting to know your future joint owner is one that occurs naturally over the initial stages of buying a home because you'll need to:

Apply for a Mortgage
This is a very important part of the process which can take months to complete. You'll need to book a mortgage appointment to work out the best mortgage opportunity based on both your circumstances. 
This step normally involves considerable preparation: you have to check that your credit rating is good and rationalise your outgoings if you are to be regarded as a serious prospect by a lender.

2Look for properties
It can take an average of 15 viewings to sell a house which means that each and every time there are 14 buyers who aren't chosen. It can take months to find a property in the area you like, can afford and can win your bid on. All of this time you'll be getting to know your future mortgage buddy as you go house-hunting looking for that first home.

"15 viewings before you sell means 14 buyers looking for another property"

3Complete the conveyancing process
It can take anywhere from 2 to 4 months to complete the conveyancing on your purchase. The legal process is notoriously complex; especially for shared ownership, help to buy and leaseholds which are all prime first time buyer properties due to their greater affordability.

After all the time spent going through the formal process you'll know more about your future mortgage buddy than you probably know about many of your Facebook friends. The key is to start the above process knowing that you have similar interests and living habits: that's why it's so important to ensure you have an open, honest dialogue when planning who to share buying a home with.

"It can take anywhere from 3 to 12 months after meeting your mortgage buddy before you'll be able to move in"

How do you find someone to buy with?

Tick Use online social networks such as 

TickFacebook and other social networks

Networking through family, work etc. 

How can you protect yourself?
It's completely understandable that you'll want to have safeguards in place to protect yourself against things going wrong when you buy a home with someone.

Life being what it is, any number of events might present challenges during your joint ownership, regardless of whether you did or didn't know your other joint owner to start with, even if both of you act with integrity and have the best intentions.

To take a couple of scenarios, your other joint owner might have to sell up suddenly to move into the home of an unwell elderly relative to look after them or they might lose their job and therefore their ability to contribute to monthly mortgage repayments. You need to have something in place which sets down procedures you both agree to adopt should these kind of situations occur.

You can do this by both of you drawing up and agreeing a robust Shared Ownership Protection (click to find out more) before you move in together.

How can you get a Deed of Trust?
Click here to inform us online or call us on 0333 344 3234