Buying property with family or friends is becoming increasingly common. It’s usually set up as a tenants-in-common purchase, which lets two or more people own an interest in a property. With careful planning, co ownership can lift borrowing capacity, spread costs and support longer-term goals.
Co ownership suits many situations: siblings purchasing a first home, parents helping children onto the ladder, friends establishing a shared household with clear rules, blended families pooling resources for a larger home or dual-occupancy, and investors teaming up for a long-term rental. If you are buying a house with a friend, or considering joint ownership with siblings, aligning expectations from day one is crucial.
What are the advantages of purchasing with family or friends?
Advantages of purchasing as tenants-in-common include:
Entering the market sooner: combining deposits can mean less time saving and being ready to buy quicker
Sharing the purchase price and fees
Sharing ongoing costs like loan repayments, maintenance and upkeep and property management fees
Building equity faster
You can sell or leave your share to whoever you choose
What are key things to think about when considering buying with family or friends?
Successful co-ownership starts with partners who are financially compatible, dependable and willing to communicate openly. Before you commit, sit down together and agree on:
- Financial compatibility: Income stability, savings behaviour, credit history, existing debts and comfort levels with repayments and potential interest rate rises
- Lifestyle expectations: Privacy, visitors, pets, parking, working from home and how shared spaces will be used day-to-day
- Timeframes and plans: How long each person wants to hold the property and what events (such as relocation or major life changes) might trigger a sale or buy-out
What is the main purpose of the purchase? Decide whether you are buying a home to live in, an investment to rent out, or a stepping stone to future properties. This decision will influence your choice of location, property type and budget. For example, a shared home might prioritise extra bathrooms and good sound separation, while an investment might focus on rental returns and low-maintenance features. Buying a house with a friend or family member to live in will involve different considerations to buying property purely for investment, but both arrangements benefit from clear, written commitments.
How does home finance work in a shared purchase?
Lenders might let you mortgage each share of the property independently. Other co-owners have no obligation to pay a mortgage that’s only over another owner’s share of the property.
But not all lenders offer these types of mortgages, so check your finance options with your mortgage broker before agreeing to any purchase.
If you’re a first home buyer, you may still be eligible for the First Home Guarantee to purchase your first home with a 5% deposit without paying lenders mortgage insurance (LMI). Generally, all people purchasing the property will need to be eligible for the First Home Guarantee, however only one grant will be issued per property. To be eligible, you must both:
- Be a first time buyer (or not have owned property in Australia in the last 10 years)
- Be an Australian citizen or permanent resident
- Live in the property
What is a co-ownership agreement?
In order to avoid any problems in the future, it’s smart to enter into a co-ownership agreement. Among other things, a co-ownership agreement sets out the terms of on-selling shares in the property, the proportion of ownership and liability for costs such as the mortgage, maintenance and upkeep. You should talk to a solicitor to make sure your legal rights are protected.
Frequently asked questions
How do we decide our ownership shares? Ownership shares should reflect your contributions and intentions. Many co-buyers choose tenants in common with shares based on deposit size, and include clauses to adjust if one person pays for renovations or makes larger repayments later.
What happens if one co-owner wants to sell? Your agreement should set out an exit process, including notice periods, how independent valuations will be obtained, a right of first refusal for remaining owners and a clear timetable for listing the property if a buy-out does not proceed. Some groups schedule review dates to reassess their plans, which is particularly useful when buying a house with a friend and circumstances change.
Can friends still buy together if one person has weaker credit? Yes, but the group’s borrowing capacity may be lower and the loan terms may be less favourable. You can strengthen the application by reducing other debts, increasing the deposit or considering guarantor support. In some cases, it may be better to pause and improve the weaker credit score before applying for a joint home loan.
Is it better for us to live in the property or rent it out? The right choice depends on your goals. Living in the property can reduce living costs and may offer main residence tax concessions. Renting it out can improve cash flow and keep cost-sharing more straightforward.
Do we really need a co-ownership agreement if we are family? A clear written agreement is highly recommended as it helps prevent misunderstandings and provides a framework for dealing with difficult situations. It protects relationships by setting rules and exit processes before issues arise.
Who is responsible for major repairs and upgrades? Decide upfront what counts as a capital improvement versus routine maintenance, how approvals will work and how costs will be shared. Keep detailed records of contributions so ownership shares can be adjusted if you have agreed to do so, particularly for tenants in common where unequal shares may change over time.
