The steady rise in property prices as well as the imposition of strict mortgage lending requirements has meant that getting on the property market is tougher than ever before. It is therefore important that once you have made your first step onto the property ladder, the necessary safeguards are securely in place to protect your investment from future troubles.
One of the more difficult aspects of purchasing a property for the first time is saving up enough money for a deposit. This can become even more problematic when having to balance the cost of bills, groceries and high rental costs. In many circumstances, parents assist their children with this initial financial burden, providing a lump sum either as a gift or as an amount to be paid back at a later date. Regardless of how this money is handed over, it is important that the intention of the parties is expressly agreed so that potential disputes do not arise in the future. If the money is to be given on the promise of being paid back, it is useful to set out a payment schedule, outlining when payments should be made and at what rate.
When purchasing a property with a friend or partner, it is also important that you both understand the different legal ways in which a property can be owned, and the varying implications of that ownership. You should both bear in mind how you want to own the property as well; either as joint tenants or as tenants in common. In a joint tenancy, both parties own the property fully and, should one of you die, the property will pass wholly to the surviving tenant. On the other hand, a tenancy in common occurs when each party owns a specified share of the legal estate, and upon death, the deceased’s share will pass to the beneficiary named in their will.
Each method of property ownership is beneficial depending on the circumstances of the cohabiting couple, but it is important that a decision is made before purchasing. It is recommended that, if friends are jointly purchasing the property, a tenancy in common be agreed to hold the legal estate. If this is the case, it is also advisable to enter into a cohabitation agreement, which records the financial arrangements during the friendship, as well as specifying what will happen, financially and practically, should you not agree to live together in the future.
For more information about how you can ensure your proprietary investment is properly protected, feel free to give us a call on 01536 276300. At Seatons, our team of highly trained legal advisors have a wealth of experience in conveyancing matters and provide clear, easy to understand legal advice at low sensible fees.