Buying a property with a friend?

[dumbstruckdumptruck]

My closest friend and I are in our mid-30s, and both thinking about moving permanently to Scotland at some point in the future (family reasons).

I'm currently resident in the EU, and so getting a UK mortgage alone is likely to be pretty expensive.

She and her partner have been thinking about renting a place in Edinburgh at some point over the next year.

I've got a good chunk of money for a deposit currently in an ISA, which I can't touch for tax reasons but would be willing to take out if the right property option became available. They currently don't have much to put into a deposit.

The idea of buying a place together with her has been playing on my mind – she and her partner could live in it full-time, I could use it as a place to visit the UK when I come back, and together we could keep expenses lower than if we were buying separately.

Is this a mad idea? I trust her and her partner entirely, but of course we'd write up a contract that takes care of everyone in the event of something going wrong.

What should I consider that might not have occurred to me?

So what happens when you permanently move back to Scotland? It would be awkward living with them full-time. And what if they split up?

It seems they need you for the deposit. I wouldn't touch it with a barge pole personally.

Ha! I hear you :)

It's not them 'needing' me entirely one-way, though – we haven't had the conversation yet, the idea is mine as a way to make things work for all of us (we could also say I 'need' them, given how tricky it would be for me to get an ex-pat mortgage at an affordable rate).

I'm unlikely to move there permanently for a number of years, by which point we could reassess and make a decision about what next.

For me it's mostly about the investment rather than the having-a-house-to-live in part.

No, never mix friends and money. That has disaster written all over it.

I think two single people with similar deposits both planning on living there in a rising market is one thing, but for you I wouldn't. What happens if your circumstances change and you want out and they still don't have enough equity for a deposit? Negative equity is quite possible in the next couple of years, how would you share the losses, what happens if they want to move and you still can't get a decent mortgage. What happens if you want to move back but not to Scotland, where you don't appear to have links.

All fair points! OK, putting the idea back in the box 😁

Did you know that Scotland has a separate legal system (from the one in England and Wales) with quite different laws in respect of A) inheritance and

B) property rights. This matters because your best friend has a partner.

You have no control over your best friend's relationship with her partner now or in future. They might marry, or enter a civil partnership; then divorce, your BF might die. They might become parents.

The point is that the partner (or a child) could at some point gain (Scottish) legal rights over property owned (or part owned) by your best friend.

If they are unmarried, and the partner contributes to the mortgage payments they acquire some rights. Even though their name is not on the title deeds.

It's a potential minefield and one I wouldn't touch with a barge pole. .

I wouldn't do it, it's things like this that destroy relationships.

I think it could work. I’ve discussed options like this with friends before. You say you have a very trustworthy relationship and you will be very sensible about getting it all legally set out so it’s clear. Lots of friends do this. And it’s a good investment- Edinburgh is a very desirable city.

I've done this in England. 50-50 tenants in common. Halve everything, have rented it out in the past. I currently live there, pay the mortgage and rent to friend equivalent to her share of profit that would be made by renting out (at below market rate).

I very seriously considered buying a house with my friend a few years ago. The difference is we both had similar sums for a deposit and similar affordability for a mortgage.
Even then we decided against it, it was too risky, what if one of us met someone, got sick and couldn’t work, wanted a baby etc etc etc.

I only had to read the title of this post and my head was screaming "NO!". Please don't. There's not enough space here to list the myriad of reasons but life changes I.e meeting new partners, job loss, insolvency, fall outs for any number of reasons, arguments over what needs fixing and how much to spend if at all, relocation, new job offers, and on it goes...

I would not do this in your case. If you were 2 single women working in the same city with good jobs and deposits with good legal advice I might consider buying a place together.
At the moment your working in the EU and you don't know what will happen in your future.
The government are changing rules on buy to let and you could end up with a big tax bill especially if your not a resident in the UK. Then you take out a mortgage and fall out with your friend - what happens then?
If you buy a place you have the mortgage, insurance and maintenance costs not to mention what happens if a tennent stops paying rent or does serious damage in an apartment or house?

One of my friends here in Ireland bought a house and it ended up in negative equity after the 2008 crash. They became a landlord because they could not sell the property. They have had to get tennents, maintain the property and pay tax on this income. Their current tennents are planning to leave soon. My friend has decided to sell the house then because they don't want the hassle any longer.

You have money in the UK and you might be glad of this cash in a few years time. Having cash gives you options of where you can buy your own home in the UK down the line.
It also means that your in a great position to have a smaller mortgage and can move fast because you have not a property to sell either.

Could you not buy the property yourself - mortgage it and rent it out to your friend?