Millennials have discovered alternative ways to enter the property market

WITH property prices continuing to rise, many Millennials are turning to alternative means to take their first step on the property ladder.

With property prices continuing to rise, many Millennials are turning to alternative means to take their first step on the property ladder.

Among the emerging trends, is property co-ownership with family and even friends.

In fact, Kohab CEO and co-founder David Dawson said as many as 31 per cent of Australians would consider co-buying property with a relative or friend as a way to get into the market.

David Riley of LJ Hooker Kenmore said there was strong demand for people seeking additional self-contained living on a property.

“It could be for an established family with older teenage children, or for an extended family who have their parents moving in with them,” he said.

“Or extended family members coming from overseas.”

He said in addition to those instances were people seeking ways to supplement their income.

“They’re using self-contained living, especially a fourth bedroom, and especially if it’s a highset home,” he said.

“If it’s downstairs they can put a kitchenette in and as long as it’s got separate entry they can lease that out on a separate lease, or they can do Airbnb.

“I’ve seen a lot of owners looking to supplement their income by doing Airbnb or short term stays.”

Adcock Prestige principal Jason Adcock has noticed an increase in the number of co-ownership buyers in the past five years.

“It’s certainly something that is becoming more prevalent,” Mr Adcock said.

“I’m often seeing elderly parents selling their property and then moving into quite a large property with their kids into a self-contained area. That’s not uncommon these days to see that rather than moving into a retirement village.”

Mr Adcock said buyers seeking a co-ownership arrangement had expressed interest on his listing at 62 Crescent Rd, Hamilton, which comes with a fully self-contained flat on the lower level.

“We’ve certainly got interest in that regard, because you’ve basically got a fully self-contained area downstairs, with its own kitchen, living area, bathroom and bedroom,” he said.

“They could live down there comfortably; it’s like their own little house.”

Mr Dawson said in addition to families, flatmates or friends were perfect co-ownership partners and by combining buying powers, deposit and mortgage repayments could be halved.

However, he added, it was crucial to understand all the factors involved in co-ownership, as well as considering your co-buyers’ needs to ensure the relationship did not go sour.

“Co-buying property with a friend is a smart idea in the current climate,” Mr Dawson said.

“Despite the close bond between friends, it’s important to have a legal co-ownership agreement drawn up to ensure the safety of both parties and avoid any major fallouts.”

Among Mr Dawson’s top tips for co-ownership was to clearly stipulate the role and responsibility of each person involved in the co-ownership agreement.

“It’s key to always have your expectations outlined in a legal document to ensure that each party’s concerns are met in order to sidestep any disagreements that could arise,” he said.

“While it’s important to have trust, a co-ownership agreement exists so that you don’t need trust, per se. Too many co-ownership arrangements are based on trust alone and verbal agreement, which is an avoidable risk.

“Keep you and your friends safe by having this legal document in place.”

He added that all parties must be willing to compromise if necessary.

“Doing anything with another person means that you may need to compromise at times,” he said. “This may be on location, size or budget.

“This is a partnership after all.”

Having a view to the future with an exit plan was important to keep in mind, according to Mr Dawson.

“Circumstances change, and as such it’s crucial for both parties to be able to exit the agreement at any given time,” he said.

“By having this drawn up in your co-ownership agreement, you’ll have peace of mind that each party will be safe if the time comes for you to part ways.”

Finally, he said it was imperative to know where you stand at all times.

“Be involved in all bank meetings, loan conversations and legal agreements to ensure you are across everything throughout the co-ownership process.”

Originally published as More than one way to own a house

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