Is Buying Property With a Partner a Good Idea?
The rising cost of living and property appreciation has boosted the number of people entering into homeownership in partnership with a romantic partner, family member or a friend.
“A partnership allows both parties to contribute towards the deposit, bond repayments and other financial responsibilities,” says Tyson.
This is according to Tyson Properties CEO, Chris Tyson, who says this makes it easier to reach the affordability levels demanded by the banks and diminishes the individual’s exposure to risk by sharing the whole experience.
Tyson says currently bonds average between R950 000 and R1 million, meaning applicants must have a gross salary around R30 000 - and many South Africans fall far below that salary bracket, but still dream of homeownership.
“A partnership allows both parties to contribute towards the deposit, bond repayments and other financial responsibilities. It also means joint responsibility for any financial penalties from late or skipped repayments, so understanding the implications of homeownership is essential,” he says.
“Our advice for those entering a partnership would be to ensure there is a signed agreement in writing stipulating each party’s responsibilities and how certain situations will be resolved.”
Tyson says the most important factors that need to be established are what each party wants from the venture, how long they plan to live together and what happens if one wants to sell their share.
As with any property purchase, the parties must know their future plans and how this will impact on the partnership, he says.
Both parties must also keep a record of all the documents and payments made relating to their jointly-owned property as, if one person defaults, the bank holds all parties liable for the debt.
“In essence, the relationship must be based on complete trust and honesty where financial matters can be openly and freely discussed,” says Tyson.