Young Australians say they’d consider buying a property with a friend or family member if it meant getting their foot on the property ladder.
Independent research commissioned by Slater and Gordon Conveyancing Works found more than a third of 18-24 year olds, and just under a quarter of 25-34 year olds, would consider buying a property with a friend.
Comparatively, those aged 45 plus were far less likely to consider buying with a friend but far more likely to consider buying a property with a family member other than a spouse.
Slater and Gordon Conveyancing Works Solicitor Robert Kern said young people were feeling the squeeze when it came to property prices.
“Capital city prices increased by 10.9 per cent between March 2013 and March 2014 and recently the International Monetary Fund warned Australian homes were the third most expensive of 24 countries.
“So it’s no surprise young people are willing to consider buying a property with someone other than a partner to get their foot in the door,” Mr Kern said.
“That more of the baby boomers would consider buying with a family member probably reflects the fact an increasing number of parents recognise their children are fast being priced out of the market and are willing to help them out.”
Mr Kern said buying with friends or family members was becoming more common, but both scenarios could have drawbacks and it was important that a contract provides for any change in circumstances.
“Down the track it’s quite possible one of the owners will want to sell or can’t cover the mortgage, or even just wants out of the contract.
“That’s why it’s important you consider all of the potential scenarios up front and actually have mechanisms for one or both of the parties exiting the contract written into it.
“Without them, the worst case scenario is that the Supreme Court will step in and appoint an independent trustee.
“This can be a stressful, long and expensive process, so some people choose to include alternative dispute resolution avenues, such as mediation, in the contract as well.
Buying a property with family members can also present problems where common law rules apply.
“For example, if there is a dispute between parents and children, the courts may find that it is reasonable to assume the property was a ‘gift’ in which case the parents could forfeit the funds paid towards the property to their children,” Mr Kern said.
The research also found more than 58 per cent of the 2000 Australians surveyed would not feel confident working through legal documents themselves and just over half did not understand simple terms such as the difference between joint tenants and tenants in common.
“Buying a property is a huge commitment that can be complicated if you have an unconventional arrangement,” Mr Kern said.
“While I think it’s great that young people are taking innovative steps to get into the market, it’s important they are protected if circumstances change.
“It’s a lot more difficult to change a contract later than at the beginning,” he said.
The research found:
- 37.85 per cent of 18-24 year olds and 23.65 per cent of 25-34 year olds would consider buying a property with a friend
- Only 9.14 per cent aged 55+ would consider buying property with a friend
- 60.75 per cent of 18-24 year olds and 53 per cent of 25-34 year olds would consider buying property with a family member other than a spouse
- 37.7 per cent of 45-55 year olds and 37 per cent of Australians aged over 55 would consider buying a property with a family member other than a spouse
- 58 per cent of 18-34 said they did not know the difference between joint tenants and tenants in common, compared with 48 per cent in the 45-54 age bracket and 45.5 per cent over 55
- 58 per cent of Australians said they would not feel confident working through the legal documents themselves when buying or selling
- 54 per cent of 18-24 year olds, 52.4 per cent of 25-34 year olds, 57 per cent of 45-54 year olds and 64.5 per cent of Australians over the age of 55 said they would not feel confident working through the legal documents themselves when buying or selling