Buying a flat with a friend? The pitfalls...

[Slumdog]

Currently looking at buying/investing in a flat with a friend, where we are both jointly funding the purchase of the property. The problem lies with the purchase of the property, and the property is only available to first time buyers (of which I am not) and so the name on the mortgage would be of my investing colleague only.

Is there any legal paperwork that I can get drawn up, with solicitors for example stating that although the name on the mortgage is Mr X, the property is actually owned by both Mr X and Mr Y.

The colleague indeed I would regard as a trusted friend (but who knows what can happen in the future).

What other obstacles am I not seeing when doing this purchase with a friend?
Whats the worst that could go wrong, socially and legally?

[wobbegong]

What other obstacles am I not seeing when doing this purchase with a friend?

Friendships are prone to breaking.

[Support Monkey]

Don't even go there, its a minefield of prolems, what happens if you fall out with each other, what happens if they decide to move in/Out move their relations in /out, suddenly decide they need their money out as they want to travel round the world instead

trusted friend or not it can easily turn sour were money is concerned.

[alreadypacked]

Currently looking at buying/investing in a flat with a friend, where we are both jointly funding the purchase of the property. The problem lies with the purchase of the property, and the property is only available to first time buyers (of which I am not) and so the name on the mortgage would be of my investing colleague only.

Is there any legal paperwork that I can get drawn up, with solicitors for example stating that although the name on the mortgage is Mr X, the property is actually owned by both Mr X and Mr Y.

The colleague indeed I would regard as a trusted friend (but who knows what can happen in the future).

What other obstacles am I not seeing when doing this purchase with a friend?
Whats the worst that could go wrong, socially and legally?

I think you find that draw up a contract which based on something illegal it is not enforceable.

You will also need an agreement on what happens if one of you wants out, or something happens to one of you.
What expense you both agree to be spent each year etc.
You can’t cover everything that might happen, so you will have to agree how to deal with things not covered.
I would steer clear if I was you, because as soon as you invest something more interesting will come along.

[TimberWolf]

Whats the worst that could go wrong, socially and legally?

Hmm. Property prices crash, your friend can't service his mortgage, negative equity, unemployment, solicitors fees, repossession and then homelessness.

[MarillionFan]

You need to be on the mortgage mate.

You could try and take it out as a joint BTL mortgage.

My first house was with a mate. My mother leant him and I the deposit and actually good as gold he took an extra job and we both paid it back within a year.

We lived together for about two/three years and then he moved a bird in. Which is annoying when they're having loud sex upstairs all day and night. Normally this would have been an excuse for a but she was pig ugly(actually I apologise to the pig in this case)

He then remortgaged, bought me out and I bought another place. All very amicable and legal.

[SueEllen]

What other obstacles am I not seeing when doing this purchase with a friend?
Whats the worst that could go wrong, socially and legally?

I know a group a 4 guys who had the same idea to buy an investment property together.

They were stuck with the house for 10 years due to property prices.

Two of them who were brothers said it was the worse thing they had ever done as renting out to tenants is stressful enough but trying to convince the other parties to sell was the hardest.

In your case you have additional problem you are trying to do something that isn't legal. No solicitor worth their salt will want to get involved unless the mortgage company is informed where all the money is coming from.

[Slumdog]

Thanks for the respones. Just received the same feedback from a colleague during lunch about trying to make a contract for something which is illegal. Apologies, I hadn't seen it that way.

So onto looking for the next thing to try...

[Freamon]

What sort of restriction is it that means the flat is only available to first time buyers, and yet will still let you rent it out once bought?

[Paddy]

Currently looking at buying/investing in a flat with a friend, where we are both jointly funding the purchase of the property. The problem lies with the purchase of the property, and the property is only available to first time buyers (of which I am not) and so the name on the mortgage would be of my investing colleague only.

Is there any legal paperwork that I can get drawn up, with solicitors for example stating that although the name on the mortgage is Mr X, the property is actually owned by both Mr X and Mr Y.

The colleague indeed I would regard as a trusted friend (but who knows what can happen in the future).

What other obstacles am I not seeing when doing this purchase with a friend?
Whats the worst that could go wrong, socially and legally?

I may work out on a freehold property if you register an interest with the Land Registry. It won’t be possible to bind you on a leasehold flat and the terms of the lease may exclude you from living there.