It is no secret houses are more expensive than they were a decade ago, so it's not a surprise many Kiwis are looking to pull their resources together with a mate or two to get on the property ladder.
Co-owning a home with a friend is becoming more common in New Zealand but it comes with its pros and cons.
Appearing on AM, Smith and Partners Lawyers solicitor Duncan Lang said young people are commonly turning to co-ownership agreements as the leap for a deposit can be steep. However, he also has older clients who are either downsizing or looking to purchase a second property.
"Because of the increasing property market and how much housing generally costs in New Zealand, you are seeing people pull together with their friends."
He said the key thing potential buyers need to consider is having transparency with friends about how much money they can afford to help service the mortgage
"If you have friends that might accidentally skip a payment or they may not have the funds available to help meet a mortgage payment, the bank can go after everybody who owns the property to recover that debt."
To help mitigate some of the risks involved when buying with a friend, the homeowner-hopefuls can enter a property-sharing agreement which can provide terms that dictates things like how the outgoings are paid, the property is maintained and exit strategies.
Buyers can also choose to become joint tenants which means if one person dies, the ownership automatically transfers to the survivor and doesn't become part of the deceased's estate. Or they can be tenants in common - which specifies ownership percentage; in case of death, the share becomes part of the estate and is distributed according to the will.
"Having that agreement in place just provides a bit of clarity and… it can avoid awkward situations or expense further down the line," Lang said.
"So, I recommend before you even realistically look at purchasing a property, having a discussion with who you are buying it with, getting some general consensus about those sorts of terms and conditions so that, if there are issues further down the track, you've got this agreement that gives you an out."
Watch the full video for more.
