Co-owning homes new way to get on the property ladder


Kiwibank has set up a new system to streamline an alternative home ownership model, aiming to make it easier to go in on a house with friends or family.

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With soaring house prices, not to mention the rising cost of living, many are looking for creative ways to jump onto the property ladder.

Going in on a home with friends or family has always been an option, but Kiwibank has set up a system to streamline this alternative to the tradition buying model. It's called Co-Own.

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Kiwibank mobile mortgage manager Philippa Scott told Afternoons with Jesse Mulligan the system aimed to give prospective homeowners an option they may not have previously considered.

With Kiwibank economists estimating the average New Zealand household spends 11 years saving for a house deposit, Scott said it was important to remind people of the options that were available.

"It's about reminding people that you don't have to be in a traditional relationship in order to get into the property ladder and recognising that it is increasingly harder to do this by yourself as an individual."

People with a friend or family member interested in pooling resources to buy a house should contact their bank to discuss their financial options, she said.

However, Scott said it was also vital that interested parties seek legal advice to iron out any "what ifs" before making a commitment.

"Sit down and talk with a professional about the ins and outs involved because there is some risk like with any property purchase and making sure that you're aware of those.

"Also talking through those what ifs, so what if someone wants out of the arrangement early? What if you want to sell? What if you have a partner later on?"

In the case that a co-owner cannot make their mortgage repayments, the responsibility to cover the payments falls to the other co-owners.

Scott said this caveat emphasised the need to seek legal advice prior to committing to a co-ownership housing model.

"It's really important that you are going into this with someone that you trust, someone that you're comfortable discussing your financial matters with and really talking about those what ifs at the beginning."

The unpredictable nature of co-ownership was not dissimilar to the risk facing homeowners in a more traditional partnership, Scott said.

"Any home loan is not risk free and it's about understanding those risks and going into it fully informed."

In a larger co-ownership model consisting of four flatmates who want to buy a house together, a standard 20 percent deposit could be made as a collective downpayment on the house - as long as those four flatmates were planning to live in the property, Scott said.

However, a bank may require the collective to produce a legal Property Sharing Agreement to determine what the co-owners' rights and obligations are.

Scott said there were a variety of ways to set out a collective ownership model and it did not necessarily mean you were tied to your co-owners for decades.

She said every co-ownership agreement was different, with some groups agreeing on a stepping-stone approach in which everyone agreed to sell the property in five years' time.