Online estate agency Tepilo looks at the changing face of the UK housing market, with more people considering buying homes with friends and siblings.
Nothing in life stands still. Very little stays the same forever. Things are always changing and evolving. And it's the same for the property market.
And it seems that aspiring homeowners are increasingly choosing to buy and live with friends, rather than purchasing with partners or opting to go it alone.
This evolution of the UK's homeownership market has been studied closely by online furniture retailer Furniture Choice, which has conducted a nationwide survey to try and understand the reasons behind this emerging trend. To do so, it spoke with some individuals who have already purchased a home with a friend.
The research revealed that a perhaps surprising number of people are considering buying a home with a friend; some 38% of those surveyed would give serious thought to it, with the main reasons for this being an inability to afford a property by themselves (52%) and not having a partner to buy with (42%).
Buying a first home in the UK is not an easy task, as numerous stories, affordable housing schemes and campaigns attest to. The fact that many first-time buyers rely on schemes such as Help to Buy, Shared Ownership or Right to Buy, and campaign groups such as Generation Rent have been set up, tells its own story about how easy it is for first-time buyers to take their first steps on the ladder.
The average property price for first-time buyers in England isn't actually that steep, by today's standards at least, currently sitting at just under £200,000 – although this varies across the country, with London and the South East tending to be much more expensive. However, even a minimum 5% deposit on such a home would set buyers back around £10,000, which would require potential homeowners to save over £800 per month if they wanted to buy within a year. Unfortunately, saving such a sum of money is not that simple when you factor in things like rent, food, bills, travel and other associated living costs.
Once income tax and national insurance have been stripped away, the average net monthly salary for Brits is approximately £1,800 with very little wriggle room for saving once the above costs – as well as the costs of leisure and social activities – have been added to the equation. Many aspiring first-time buyers are young professionals living in rental accommodation in major cities, where the cost of living and rent can be high. Even for those first-time buyers who live at home to increase their saving potential, accruing the necessary deposit for a property can still prove difficult and time-consuming.
Financial power, however, isn't the only reason why people choose to buy with friends, with 35% preferring to live with a friend rather than on their own. Nonetheless, they prefer the security, stability and future rewards of home ownership rather than the thought of renting for the long-term.
Social changes are playing a role, too. People are doing things – such as marrying and having children – later in life, while marriage rates have been falling since the 1970s, with the average duration of a marriage lasting just 11.7 years before divorce. Although many couples choose to cohabit rather than marry, others are choosing to purchase their first home with friends or siblings instead of with their partner.
As you would expect, the trend is especially popular among young adults, who generally have less ties and responsibilities. Some 45% of 18-24 year olds have thought about purchasing homes with friends in the past, while 50% are currently having such thought processes. Meanwhile, 10% of this age group said they would trust a friend more than a partner when it comes to making such a big commitment.
If you do decide to head down this route, though, there are a few caveats to bear in mind. If there are more than two of you looking to buy a home together (say, three siblings clubbing together or three or more mates), you may find it difficult to find a lender offering three or four-way mortgages. In fact, you are likely to find this very difficult, with only a few lenders in the UK offering such deals. Of course, a possible alternative to this is putting the mortgage in the name of one or two people, but this could cause its own problems and complications.
What’s more, if you are all likely to want similar-sized rooms, with no-one keen on the box room or the smaller room, you may find it tricky to find homes with three or more bedrooms of a similar size. Not impossible, but not particularly easier either. Compromise may be needed. Failing that, lots of property browsing.
Equally, if you opt to buy with friends you need to be very confident in that friendship – you need to trust them explicitly and have similar tastes and expectations. It might be useful to draw up an agreement, outside the legal framework of a mortgage, which states a number of rules: such as not allowing partners to move in, banning smoking indoors or not painting the walls a lurid red. That way, any disagreements at a later date could be mediated by reverting to this ‘contract’ to prove which rules and regulations had been set out.
It would also be a good idea, if you’re buying with friends or siblings, to agree on furniture, décor and the overall style or theme of the house before you make a major financial commitment. Again, buying with someone who you know has similar tastes would help to avoid such issues.
For 62% of those surveyed, the downsides of buying a home with siblings or friends outweighed the possible benefits, with 34% put off as they wouldn’t know what would happen if they fell out with their fellow buyer(s), while more than a quarter (28%) don’t trust their friends enough to make the initial large investment.
Such concerns are reflected in the time buyers need before committing to a purchase, with 33% wanting to be friends with someone for up to three to five years before considering a joint house buy, while for those in a relationship, buying as a couple, this falls to two to three years.
With the current difficulty of buying alone, the appeal of buying with friends or family is obvious. However, it doesn’t come without its downsides, difficulties or risks. From interior design choices to garden space, our priorities often differ – so if you do decide to purchase a home with friends or siblings you need to make sure you are on the same page, have a strong understanding of each other’s likes and dislikes and similar lifestyle goals.
If this isn’t the case, you’d be wise to think twice before committing to any major purchase.