Buying Property with Friends or Family in Australia

Joint property purchases can fast-track homeownership in Australia's expensive market. Success requires choosing the right ownership structure (tenants in common vs joint tenants), securing appropriate financing, and having bulletproof legal agreements. This guide covers everything from loan options to exit strategies.

With median house prices exceeding $1 million in Sydney ($1.496M) and Melbourne, and the combined capital city median sitting at $1,044,867, traditional solo homeownership feels increasingly out of reach for many Australians. Smart buyers are adapting by pooling resources through strategic co-ownership arrangements.

The numbers don't lie:

• Combined household incomes unlock 40-60% more borrowing power
• Dual deposits can reduce time-to-purchase from 8-10 years to 3-5 years
• Shared ownership enables access to premium suburbs otherwise unaffordable solo

Pros:

Cons:

Joint Tenants:

• Equal ownership shares (always 50/50)
• Right of survivorship (automatic inheritance)
• Cannot sell individual shares
• Best for: Married couples, long-term partnerships

Tenants in Common:

• Flexible ownership percentages (60/40, 70/30, etc.)
• Individual shares can be sold or inherited via will
• Each owner controls their portion independently
• Best for: Friends, siblings, investment partnerships

Both applicants share equal responsibility for the entire mortgage debt. Lenders assess:

• Combined serviceability (income minus expenses)
• Both credit histories and employment stability
• Joint deposit contributions and savings patterns
• Shared liability for full loan amount

1. Split Loan Arrangements Some lenders allow separate repayment accounts while maintaining joint liability. Useful for:

• Different income levels
• Varying contribution preferences
• Tax optimisation strategies

2. Family Guarantee Loans Parents or relatives guarantee part of the loan, enabling:

• Lower deposit requirements (sometimes 5-10%)
• Avoiding lenders mortgage insurance
• Faster property entry for younger buyers

3. Investment Loan Structures For co-buyers purchasing investment properties:

• Interest-only payment options
• Tax-deductible interest expenses
• Depreciation and capital gains considerations

Typical expenses to split:

• Property deposit (usually 20% of purchase price)
• Stamp duty (varies by state: 3-7% of property value)
• Building and pest inspections ($800-1,500)
• Legal fees ($1,500-3,000)
• Loan establishment costs ($600-1,200)

Monthly expenses to consider:

• Mortgage repayments (principal and interest)
• Council rates and water charges
• Strata fees (for apartments/townhouses)
• Building and contents insurance
• Property maintenance and repairs

Pro tip: Set up a joint expenses account with automatic transfers to avoid payment conflicts.

A comprehensive co-ownership deed should address:

1. Financial Contributions

• Initial deposit percentages
• Ongoing repayment splits
• Renovation and improvement funding
• Unexpected expense responsibilities

2. Usage Rights

• Who can live in the property
• Rental income distribution (if applicable)
• Guest policies and property access
• Maintenance decision-making authority

3. Exit Mechanisms

• Forced sale triggers and procedures
• Buyout valuation methods
• Right of first refusal terms
• Dispute resolution processes

4. Life Changes Provisions

• Job loss or income reduction scenarios
• Relationship changes (marriage, divorce)
• Geographic relocation requirements
• Estate planning and inheritance rules

Professional legal agreements typically cost $2,000-4,000 but prevent disputes that could cost tens of thousands later.

Voluntary Sale: Both parties agree to sell and split proceeds according to ownership percentages.

Forced Sale: One owner triggers sale due to financial hardship or life changes. Agreement should specify:

• Notice periods (typically 90-180 days)
• Marketing requirements
• Minimum price thresholds
• Commission and cost sharing

Buyout Arrangements: One owner purchases the other's share. Key considerations:

• Independent property valuations (usually 2-3 required)
• Financing arrangements for buying party
• Settlement timeframes
• Outstanding debt responsibilities

Mortgage Protection Insurance: Covers loan repayments if one borrower becomes unable to pay due to:

• Serious illness or injury
• Involuntary unemployment
• Total and permanent disability

Building and Contents Insurance: Protects the property structure and personal belongings. Consider:

• Agreed value vs indemnity policies
• Natural disaster coverage requirements
• Personal liability protection
• Temporary accommodation costs

Life Insurance Considerations: Term life policies can fund buyout arrangements if one owner passes away, preventing forced sales during grief.

Owner-Occupier Benefits:

Investment Property Rules:

• 50% CGT discount for assets held over 12 months
• Depreciation deductions for building and fixtures
• Negative gearing benefits for cashflow shortfalls

Professional Advice Essential: Complex co-ownership tax situations require qualified tax professional guidance.

NSW: First home buyer concessions available for co-buyers under certain conditions 

VIC: Foreign buyer surcharge may apply to non-resident co-owners
QLD: Additional foreign acquirer duty for overseas purchasers 

WA: Pensioner and senior concessions transferable to co-ownership arrangements

Each state has different requirements for:

• Property title registration procedures
• Mortgage documentation standards
• Legal representation requirements
• Settlement process variations

•  Choose co-ownership partner carefully
•  Determine ownership structure and percentages
•  Calculate combined borrowing capacity
•  Research suitable properties and locations
•  Engage mortgage broker for loan pre-approval

•  Hire experienced property lawyer
•  Draft comprehensive co-ownership agreement
•  Arrange building and pest inspections
•  Finalize loan documentation
•  Set up joint expense management systems

•  Complete property purchase settlement
•  Establish insurance coverage
•  Set up regular financial reviews
•  Monitor market conditions and opportunities
•  Plan exit strategy timing and execution

Joint property ownership can accelerate your path to Australian homeownership when structured correctly. Success depends on:

1. Choosing compatible co-owners with aligned goals and financial stability
2. Professional legal guidance for bulletproof agreements
3. Comprehensive financial planning for all scenarios
4. Clear communication protocols for ongoing decision-making
5. Realistic exit strategy planning from day one

The Australian property market rewards prepared buyers who think strategically about alternative ownership structures. Co-buying isn't just a compromise—it's often the smartest route to building long-term wealth through real estate.

Can non-residents buy property with Australian citizens?

Yes, but foreign buyer taxes and approval requirements may apply. Consult immigration lawyers for specific circumstances.

What happens if one person wants to renovate?

Your co-ownership agreement should specify approval processes, funding arrangements, and value improvement sharing.

What is limits on the number of co-owners?
Most lenders prefer 2-4 borrowers maximum. More owners create complex serviceability and legal challenges.

Can we use different deposit sources?

Yes, but lenders scrutinise all deposit sources. Gift letters and savings history documentation required.

What if one person's income changes significantly?

Your agreement should address income variation scenarios and potential restructuring options.

Disclaimer: This guide provides general information only. Seek professional financial, legal, and tax advice for your specific circumstances before making property investment decisions.