The Daily Telegraph - Saturday - Money
‘We couldn’t buy a house alone – so decided to invest together’
Desperate first-time buyers are being forced to join forces with friends to get on the housing ladder.
With cheap mortgage deals increasingly scarce, first- time buyers have found themselves unable to borrow enough on their own salaries to secure a mortgage. One in 10 under-34s would consider asking a friend for a financial contribution towards buying a home, according to Generation Home, a lender.
Carolyn Matravers, of financial adviser Old Mill, said the rise in young people buying with friends was a logical conclusion to the supercharged housing market, particularly in London.
“One of my client’s children bought with a friend in London and it worked very well for them,” she said. “They lived together for a few years and then sold it and have both since got married and bought properties with their spouses.”
Cullen Farleigh and Olamide Soyemi, both 27, split a mortgage on a dilapidated house in east London. They met at university and bought in 2020 before spending two years renovating it.
After graduating, the pair worked as freelancers, earning £60,000 each a year. Pooled together, they were able to borrow £450,000 with the help of a specialist broker who deals with freelancers.
Mr Soyemi is single but Mr Farleigh was – and still is – in a long- term relationship. But he said it made “a lot of sense” to buy with his friend, rather than his partner. “I always planned to get a house with my girlfriend,” he said. “She’s incredibly supportive and I know I’m going to end up doing a similar thing with her one day. But this was an investment, we’re business partners.”
However, Ms Matravers, said friends buying together should be aware of the potential pitfalls. “While buying jointly with family is one thing, buying with friends is quite another,” she said. “You may think you know someone well, but when money is involved, it can change relationships.”
Mr Farleigh’s partner lives in the house with them and a fourth bedroom, previously rented out, serves as an editing suite for the pair’s creative work.
The plan is to remortgage when their five-year deal comes to end, take out the extra equity they earned by renovating the property and then rent it out. They then plan to buy a second property together – the one next door.
Despite their success, the men are acutely aware of the risks involved in buying with a friend. Mr Farleigh said: “It has to be the right friend and treat them like a business partner. You have to be able to debate things and it takes a certain type of friend to do that with.”
One mistake the pair made was, in a rush to minimise paperwork, signing as “joint tenants” rather than “tenants in common”. This has prevented either of them from including the property in a will, and the other will inherit the share of the property by default. While the two have “never butted heads”, other shared purchases are not so harmonious.
Rachel Willis*, 31, bought a south London property with a friend in 2017, having known each other since they were 11. However, problems started with a disparity in mortgage and deposit contributions and their plans for the property.
Ms Willis earned about half of what her co- owner did and the pair agreed to split the mortgage repayments equally. However, when they come to sell, Ms Willis’s friend will take three quarters of the profit, in line with what they contributed to the deposit.
The arrangement has proved tense. The co- owner planned on moving abroad and saw the property as an investment rather than a home, whereas Ms Willis said she wanted to make changes. The other room has since been rented out to a series of Ms Willis’s friends, and the rent covers the co- owner’s contribution to the mortgage and bills.
With their three- year mortgage approaching its second renewal period, the pair are looking to sell the property. “For her part, it was an investment,” Ms Willis said.
“For me, it was better to pay towards a mortgage than to pay rent. I don’t know how much I’ll come away with. She could buy me out but that’s not going to happen. In the meantime, I’m saving.”
Having lived with friends for the last five years, Ms Willis, who is single, said she is ready to tackle the property market on her own and would not buy with a friend again.
‘ You may think you know someone well, but when money is involved, it can change relationships’