Do you need to buy a home with a stranger to get on the property ladder?

How do you feel about living with a stranger?

Shared accommodation is becoming more and more prevalent; especially in London. And it’s not just students and young people that are forced to co-habit with people they don’t know very well. Data from SpareRoom shows that the demand for homes shared with strangers is high; there are three flatshare-seekers for every room listed on the site.

But now that trend is crossing over to the first-time buyer market, as research from HSBC shows that, of potential first-time buyers:

  • 80% would buy a house with someone who was not their life partner
  • 59% are open to buying a home with a stranger
  • 5% would buy a home with their ex
  • 4% would choose someone they met at the pub as a co-owner

Those figures show just how bleak the outlook can be for first-time buyers. And the story is even worse in the capital.

Is it a good idea?

Possibly not.

Even if buying a home with a stranger sounds like a great idea to you, it is likely to lead to issues in the long run. Those who say that they would make such a commitment with someone they don’t know have certain standards that they would like their co-owners to meet, these include:

  • Paying the bills on time (80%)
  • Being open to compromise (48%)
  • Remaining calm under pressure (42%)
  • Having a good credit rating (31%)
  • Earning over £50,000 per year (18%)

However, even if the right person walks in and meets all these criteria and more beyond, buying a house is a long-term commitment, and who you choose to do it with will matter…eventually.

For example:

  • What happens if one or both of you enters a serious relationship, or decides to start a family? How will you decide who keeps the house?
  • And will you be able to buy their half if necessary?
  • How will you cope, if the relationship breaks down and you only find out that you are incompatible when you are far enough along into the buying process that you can’t turn back?

Making it work

If you are intent on buying a house with someone you don’t know that well, you can still make it work. But you will need to be more conscious about the future and may need to take additional steps in the beginning to keep things smooth-sailing further down the line.

For example, you may need to draw up additional agreements which outline what will happen if one of you decides to move out, or if either of you becomes unable to make mortgage and bill payments due to illness, injury or death.

It will also be important to get to know each other somewhat before choosing a home and committing fully. The most important thing to determine is whether you are financially compatible with one another. The next thing will be to determine what you are both looking for in a home. There’s no point agreeing to buy a home with someone who will never like the same properties as you.

The alternatives

Buying a home, without involving a stranger, or your ex, is not impossible. Yes, it will take longer and may require a few compromises, but it can be done.  Three options to make your first home more accessible are:

1. Buying with a sibling

There are many advantages to sharing a home with a sibling; You’ve already lived together, and you know each other’s bad habits beforehand. It may also be easier to get your parents or grandparents to help financially if they are helping more than one relative in a single transaction.

2. Being flexible

Your first home is likely to be cheaper if you compromise on some of the features you are looking for. This could range from looking for a home which needs more TLC than you expected or seeing what is available in other locations.

3. Saving for longer

If you are not willing to include a sibling or friend in the homebuying process and have set your heart on certain features which cannot be given up, you may just have to save for longer than planned. Whilst getting ready to buy your first home, don’t forget to:

  • Open a Lifetime ISA and benefit from a 25% government bonus on your savings
  • Review and improve your credit score to access good interest rates on your mortgage
  • Ask family for help; not necessarily in large amounts, but smaller contributions instead of birthday presents, which can be put into your Lifetime ISA
  • Look into first-time buyer schemes, such as Help to Buy loans, low-deposit mortgages and Shared ownership. (Find out more about these programmes here)
  • Read our First-time Buyer guide

For more information, or to discuss your options, contact us on 0207 808 4120.