Possibly buying property with sibling - advice needed please

[ImSuchABigIdiot]

AIBU to ask if any of you bought property with a sibling before? Posting for traffic if that’s okay.

For now, my sister and I are both living in separate rented flatshares in London.

We’re planning to rent a flat together for a few months from early next year and then, if that goes well, maybe to buy a property together (also in London).

The reason why we thought it might be a good idea to buy somewhere together is because it would make it easier to afford somewhere (especially in London).

If we did buy somewhere together and one of us then found a job outside of London, a possible plan would be to find a tenant to help for cover the cost of the mortgage.

Do you have any advice for us please?

Thanks!

Bumping.

Decide if you’re going to be joint tenants or tenants in common on the paperwork. One will (the former) mean the other person inherits it iall if one pops their clogs, the other means they can leave it to who they want. I know it’s not nice to think of these things but bear it in mind especially if things change later down the line, if someone has kids, is married or gets married etc etc. Also think about writing a will if you don’t have one already.

It's not just getting a tenant in if one of you chooses to move out but also moving anyone in.
What happens in a few months in one of you gets into a serious relationship. You need to discuss if that person would move out or would they try to force the other out and have their partner on the mortgage instead.

It's an important discussion to work out every eventuality because you don't want to risk your relationship on a house.

This is all really good advice - thanks so much Pokerface and Handsfull.

If anyone else has any other advice, it would be great if you could please post it here :)

Also, if I did end up buying a property with my sister, would you advise that later on down the line, when we’ve moved on and perhaps bought other properties separately with partners, that:

a) we hold onto this original property we bought and rent it out
b) we sell the original property.

I completely understand that there are both pros and cons for a) and b), and at we of course need to agree on whether we both want a) or b) to happen, but I’m just curious about what you might advise and suggest.

Bear in mind in the scenario that you find a partner and want to buy with them, that stamp duty on a second property will be higher.
Make sure that even though they are a sibling that you get a full written agreement re these scenarios so there’s never any disagreement.

Thanks fiorentina! Really good advice as well.

It's important to bear in mind additional ongoing costs of purchasing a flat as opposed to a house which are service charge, ground rent (can be very high in new blocks in london) and possibly a lease extension at some point in the future. If one of you moves out you may not be so inclined to contribute to the cost of these on top of the mortgage.

You need a Solicitor to draw up an agreement.

Do you have critical illness cover, in any form.

You also need to discuss what happens if one of you can't work for nay reason.

If you get a mortgage together you are both jointly and severally liable. If one of you doesn’t pay, the lender will automatically look to the other for full payment not just your half.

What contingency would you have in place if your tenant didn’t pay the rent?

I'd say to do some research outside of these forums. As a previous, naive landlord in London, I will tell you once you get someone in, it is VERY hard (and expensive) to get them out. It is highly likely one of you will want to move out with a partner before you've paid off the mortgage and you'll get a tenant. Consider the ongoing costs and if you can really afford it.

I completely agree, moira - that’s really helpful.

Yup definitely discuss the tenants in common or joint tenants, especially if the deposit amounts are going to be uneven. If for instance you have a bigger deposit amount, or are going to be paying more towards the mortgage each month, you should own a bigger share in the property.

Second discussing what happens if either of you meet someone. My dad bought out his brother when he met my mum, but this relies on having the money to do that! There is also the possibility the property has increased or decreased in value and an estate agent valuation may not be the true market value.

Personally, I would probably agree that the property was sold unless one could buy the other out. By keeping as a shared rental home there's additional maintenance, trouble with tenants, and extra costs to buy your second homes.

Are both of you keen to have a mortgage? With my sister I bought the house alone, but she and her boyfriend moved in and paid rent (cheaper than market value, not dramatically subsidising my mortgage). The plan being that if they moved out before I met someone or could afford it on my own, I would sell it or get a lodger.

They were able to live together and save up, and I then had a house which I sold when I met my husband. We agreed from the start that the house and it's upkeep were mine and so they didn't get involved in any of that.

Also be clear from the beginning what to do about appliances, furniture, pets etc. Particularly with family it can get messy - we decided from the beginning not to go halves on anything to make it simple when the arrangement ended. We knew who owned what (included who would take the dog)

Also think about what to do if one of you wants to leave before the end of the mortgage, there will be (very substantial) early repayment changes

My friend bought with a sibling who then went travelling. She paid mortgage while they were away. Then they wanted buying out at value property at the time ie.. higher than before they went away! As noone else had moved in the one who stayed in effect was deemed to have rented the traveller's share.

She felt forces into buying sibling out by remortgage because she couldn't afford ro sell, split proceeds and for more stamp duty.

Try to think of every worse case scenario and a contract to cover them or at least a clause stating how disputes are settled.