HomeSource warns of the drawbacks of property co-ownership for families
Increasing interest rates and the high cost of property have pushed many young first home buyers into property co-ownership with family, but home owner advocacy and assistance service, HomeSource, has warned of the drawbacks.
Buying into property with family can often be an attractive option for first home buyers and investors to increase a small budget and to share the many burdens of owning a home such as maintenance and financial management.
However, co-ownership needs to be carefully examined beforehand to ensure that it will meet the needs of each of the members.
Co-ownership can be a real advantage if it works well for each of the parties but it needs to be remembered that there are downsides.
“Relationship breakdown, differences of opinion, uneven financial contribution and unexpected events such as one party’s need to sell or sickness, can become distressing and costly between co-owners,” said Pia Vogel, Managing Director of HomeSource.
“There should be a legal framework that deals with all the contingencies and a process to fall back on should the parties be deadlocked or in disagreement.”
“People need to remember that it may not be possible to quickly sell the property and walk away with the proceeds should there be disagreement between the parties.”
“Increased pressures on young home buyers such as high petrol and general living expenses combined with interest rates and the high cost of property make buying a first home a very daunting prospect.”
“A common strategy is to pool funds with a family member. However, many young people are leaping into these arrangements without fully understanding the risks and consequences.”
“Many young people seek guidance and financial contribution from those closest to them, but often it is detrimental as emotions and relationship politics can get in the way. A co-ownership agreement needs to be treated like business partnership to be effective.”
24-Aug-2007