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Simply Online obo Boshoff Incorporated, Pretoria and Cape Town: What You Need to Know About Property Co-Ownership

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Property co-ownership could be the best way for you to take a step up the property ladder. We outline the benefits, potential pitfalls, and guidelines for co-owning a property.

Co-owning a property

Co-owning a property with your best friend sounds like the best idea. You’re full of inspiration on how to remodel, renovate, and stake your claim in the property world together. As a starting point towards climbing up the property ladder, or to take another step up it, co-ownership is a sweet solution. There are, however, several factors you should consider, before signing on the dotted line.

Prepare well

From a financial perspective, co-owning a property with a trusted colleague, friend, or partner, makes excellent sense. By sharing the costs between you, you may be able to purchase a bigger property, when compared with going all in on your own. Sharing the costs of co-owning a property also helps when it comes to maintenance, renovations, or other necessities attached to owning a property. Step one towards property co-ownership, of course, is ensuring you are financially prepared to own a home. To ensure you are both financially prepared to own a home, we recommend:


  • Checking your credit score: A good credit history and an excellent credit score are essential when you’re looking to purchase a property. Don’t forget: you’re entitled to one free credit score report a year.


  • Assessing your debt: There’s no escaping it - debt is part and parcel of almost everyone’s financial lives. Ensuring that both you and your fellow co-owner can manage your debt responsibly is critical.


  • Understanding your abilities: Once you’ve made a full assessment of your financial situation, you’ll have a better understanding of what kind of financial outlay you can make. As individuals and as co-owners, you need to know exactly where you stand in terms of the size of the deposit you could put down, and what type of home finance you may apply for. Understanding and sharing the finer details of your financial abilities will help you shape your goals for property co-ownership.


  • Knowing your strengths: Understand how much finance you can apply for, and what you can afford in terms of purchasing a property. Make sure to speak to your financial advisor, and calculate what you can afford, using a reliable Bond Affordability Calculator.


Ask the right questions

Your motivation to buy property together must be well-defined. People buy property for all sorts of different reasons, and it’s important you and your fellow co-owner share a common purpose. Put all your cards on the table together, as you plan to purchase a property together. And, don’t be shy or keep any important information from each other, especially when it comes to your finances. Your individual financial circumstances will have an effect on the whole co-ownership agreement.

Property co-ownership agreements

Drawing up a property co-ownership agreement is essential. The terms and conditions set out and agreed upon in your property co-ownership agreement should cover almost any eventuality in terms of your co-owned property, individual finances, and similar circumstances.

Keeping things professional is key and serves to cement and support your relationship with your co-owner too. Joint property ownership contracts should help you answer the following types of questions:


  • What happens if one of us needs to, or wants to sell their share in this co-owned property?


  • Exactly how much are we each responsible for, as property co-owners, in terms of our finances?


  • How do we make decisions around the property we purchase together?


  • What happens if there’s a dispute or disagreement between us, as co-owners of a property?


  • What is the purpose of buying this property together? If it’s to renovate and sell it, what will the profit share be, and how do we calculate that?


  • What happens if one of us dies during the time of property co-ownership?


  • How will we manage accessing the property’s bond, and what are the ramifications of withdrawing any money from the bond?


  • Who will take responsibility for particular practical aspects of maintaining the property?


Your property co-ownership

The process of property co-ownership does not end when you’ve made a successful property purchase. Once you’ve made your property dreams come true together, you’ll need to maintain the relationship, ensure you both adhere to the co-ownership agreement, and take care of your property investment together. Don’t rush your decision making, and make sure you’re ready to own property together. Your joint investment in your dream property is a long-term decision. Now that you’ve signed the co-ownership agreement, found the finance, and purchased your dream home together, it’s time to take your next step up the property ladder.


*Article sourced from Private Property*


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