Rising house prices and stricter lending guidelines, applied after the 2008 meltdown, make it increasingly difficult for young Australians in general to enter the property market. And with the overheated property market in Hobart at present, it is becoming increasingly beyond the reach of young Tasmanians to afford their own property. Baxton Property Management discusses one of the possible solutions which is becoming increasingly popular: Co-ownership
Co-ownership is a way of pooling the resources of two or more people to purchase a property together. This allows you to also pitch for a property in a much more affluent area than you could access by yourself. The pooling of your lending potential also often makes it possible to apply for a much higher loan.
Types of Co-ownership
There are two different types of co-ownership:-
Tenancy in Common: This type of co-ownership allows you to bequeath your share of the property to someone other than your co-owners. Tenancy in common also allows for partnerships with unequal shares. It is a more flexible form of co-ownership.
Joint Tenancy: Joint tenancy is normally between equal partners. Your share of the property will automatically pass to your partner on your death. This type of agreement is normally used by married couples, life partners and significant others.
So how do I Make Co-ownership Work?
Birds of a Feather: When considering potential partners in a co-ownership agreement, it helps to choose people you know reasonably well, and who have the same goals in terms of the property that you do. You must be sure they are financially reliable, and will be able to shoulder their share of the responsibilities, financial and otherwise. Don’t forget that you and your co-owners will be joint and severally responsible for all the debts incurred by the co-owners. You will share in the profits but, more importantly, you will be liable for the default of any of the other partners.
Co-ownership Agreement: Without doubt, this is the most important consideration in any form of co-ownership. Everything will appear to be honey and roses at the start of the agreement, but all too often, things can go horribly wrong. The terms of the co-ownership agreement will clearly set out what each partner’s responsibilities will be and, more importantly, what will happen in any dispute. Of equal importance will be what will happen if one partner wants to get out of the partnership or, heaven forbid, one of the partners defaults on their obligations.
With these two tips firmly in mind you should be able to make most co-ownerships work. Don’t forget that this is a business arrangement. You should leave your emotions by the door. There is no place for sentiment in this sort of partnership, however rosy things might seem at the beginning. Get your ducks in a row before you start, and you are well on your way to a working co-ownership.
Once you have bought your property, it will be time for you and your co-owners to appoint reliable property managers. Baxton Property Management in Hobart are ready to help you turn your investment into a hassle-free earner of some much needed extra income. For more info on our property management services visit us at the Baxton website.
Written and syndicated by
– Baxton Media.
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