When buying property with friends, it’s essential to decide how the ownership will be legally structured. The two most common options in Australia are joint tenancy and tenancy in common, and each has important legal and practical consequences. In today’s challenging property market, finding affordable real estate for sale has become increasingly difficult, particularly for first-home buyers. Rising prices, rental stress, and the cost of living are pushing many Australians to consider alternative paths to home ownership.
One growing trend is buying property with friends. While this can be a smart way to pool resources and get on the ladder sooner, it also introduces legal, financial, and interpersonal complexities that must be managed carefully.
At CM Lawyers, we’ve helped countless clients navigate this path with confidence. Whether you’re browsing real estate listings near me, interested in houses for sale near me, or looking for homes to buy near me as part of a group, our experienced property lawyers can provide the guidance and protection you need to make informed, secure decisions. This blog will walk you through the key benefits, potential pitfalls, and legal considerations of buying property with friends—so you can approach the process with clarity and confidence.
Why Buy Property with Friends?
Pooling finances with friends can significantly boost your borrowing power, allowing you to enter the property market sooner or invest in a higher-quality home than you could afford on your own. This collaborative approach is becoming increasingly attractive in today’s competitive market, especially for first-home buyers facing rising prices and tighter lending conditions.
Government initiatives such as the Home Guarantee Scheme have also made this path more accessible. Under the expanded scheme, friends can now purchase a property together with as little as a 5% deposit and without the added cost of lenders mortgage insurance (LMI)—a change that has opened new doors for many.
For buyers who are searching for homes to buy near me or exploring real estate for sale in high-demand suburbs, co-ownership can be a practical way to get a foot in the door. However, while shared ownership comes with clear financial advantages, it’s not without risks. Buying property with friends is essentially entering into a long-term financial partnership. Without proper planning, clear communication, and legal safeguards, it can lead to misunderstandings or even disputes.
That’s why it’s crucial to understand the implications upfront and take the right legal steps to protect everyone involved.
The Dos and Don’ts of Buying with Friends
Buying property with friends can be a great way to break into the market, but it also comes with unique challenges. To make the process smoother—and protect your finances and friendships—it’s important to know what to do and what to avoid. Here are the key dos and don’ts to keep in mind before you take the plunge.
Do: Limit the Number of Co-Owners
Fewer people generally mean fewer complications. Most experts recommend a group of two or three buyers. This smaller setup makes it easier to make decisions, manage responsibilities, and reduce the risk of disputes. It also simplifies loan approval processes and makes it easier to stay aligned on goals.
Do: Choose Your Partners Wisely
Being close friends doesn’t automatically mean you’ll make great co-owners. Look for financially responsible, goal-aligned individuals who are open to honest discussions. Ideally, your co-buyers should share similar views on budgeting, property use, and the expected length of the arrangement. Compatibility in lifestyle and financial discipline is essential.
Do: Be Transparent About Your Finances
Before you begin searching real estate listings near me or inspecting houses for sale near me, it’s essential to have open conversations about everyone’s financial status. Discuss income, debts, credit scores, savings, and spending habits. Transparency allows for fair and realistic contributions toward the deposit, mortgage repayments, and ongoing maintenance costs—and helps avoid nasty surprises down the line.
Do: Borrow Responsibly
Just because you qualify for a bigger loan together doesn’t mean you should overextend. Select real estate for sale that’s well within the group’s financial comfort zone, leaving a buffer for unexpected costs. Take into account each person’s personal goals—such as starting a family or career shifts—that might affect their ability to contribute in the future.
Do: Agree on Key Property Criteria
Before hitting the open home circuit, establish a shared wishlist: preferred suburbs, type of property (house, unit, townhouse), budget, proximity to work, schools, or transport, and long-term capital growth. Whether you're eyeing homes to buy near me or looking for a smart investment, aligning expectations helps streamline the search and prevent disputes.
Do: Define Roles and Responsibilities Early
Who will liaise with real estate agents, manage bills, coordinate repairs, or maintain the garden? Assigning responsibilities upfront ensures the property is well looked after and that everyone contributes fairly—not just financially but in the day-to-day running of the home.
Do: Get Legal Advice and a Co-Ownership Agreement
A legally binding co-ownership agreement is non-negotiable. It should clearly outline each person’s financial contribution, ownership share, responsibilities, how decisions will be made, and what happens if someone wants to exit. CM Lawyers regularly assists clients in drafting tailored agreements that help safeguard friendships and finances alike.
Do: Create an Exit Strategy
What happens if someone wants to sell their share or can’t meet their repayments? A clear exit strategy should outline buy-out options, selling conditions, and how to handle a sudden departure. Planning for the end at the start helps everyone avoid confusion and potential legal conflicts later.
Don’t: Rush the Process
Buying property—especially with others—is a major financial decision. Take your time to evaluate everyone’s goals, review legal documents, and assess the risks. Rushing into a purchase without doing your due diligence can have long-term consequences.
Don’t: Assume Everything Will Go Smoothly
Disagreements and unexpected costs can—and often do—arise. People’s circumstances change, and even the best of friends can fall out. Preparing for complications through strong legal documentation and consistent, open communication is the best way to protect your investment and relationships.
Legal Structures: Joint Tenants vs Tenants in Common
When buying property with friends, it’s essential to decide how the ownership will be legally structured. The two most common options in Australia are joint tenancy and tenancy in common, and each has important legal and practical consequences.
Under a joint tenancy, all owners hold equal shares in the property, regardless of how much each person contributed financially. One of the key features of joint tenancy is the right of survivorship—if one co-owner passes away, their share automatically transfers to the remaining owner or owners. While this structure can be simpler in some cases, it also limits flexibility. It can be more difficult to sell your share, as agreement from all co-owners is usually required. For these reasons, joint tenancy is more commonly used by married couples or close family members rather than friends.
On the other hand, tenancy in common allows each person to own a specific share of the property, which can be equal or unequal, depending on each person’s financial input. Importantly, there is no right of survivorship. If one person passes away, their share becomes part of their estate and can be passed on through their will. This structure offers greater flexibility—each co-owner can sell or transfer their share more easily and tailor their arrangement to reflect their individual circumstances.
Because of this flexibility, most friends who buy property together choose to structure their ownership as tenants in common. It provides more control, allows for clearer boundaries around financial contributions, and ensures each person's share is protected and can be handled according to their long-term plans.
The Co-Ownership Agreement: What It Should Include
A detailed co-ownership agreement offers a roadmap for managing your joint property. It should include:
- Ownership proportions and how they’re recorded on title
- Contributions to deposit, mortgage repayments, and ongoing costs (utilities, maintenance, council rates)
- Rules for decision-making (e.g. how votes are handled)
- What happens if someone wants to sell or transfer their share
- Right of first refusal for existing owners
- Dispute resolution processes
- Exit plan for changes in financial situation, relationships, or death
- Insurance requirements and coverage for all parties
At CM Lawyers, we specialise in drafting comprehensive co-ownership agreements that safeguard your investment and friendship.
The Mortgage: What You Need to Know
Typically, you’ll need a joint mortgage to buy property with friends. This means all co-owners are “jointly and severally liable”—if one person fails to meet repayments, the others must cover the shortfall. Some lenders offer specialised co-ownership or split loans, which assign individual repayment responsibilities, but these options may come with stricter lending criteria and higher interest rates.
Before applying for a mortgage, consult a financial adviser or mortgage broker to evaluate your borrowing power, responsibilities, and risks. Being well-prepared before committing to homes to buy near me can save you significant stress down the line.
The Risks: What Can Go Wrong?
Co-ownership can open the door to real estate for sale that may otherwise be inaccessible, but it also exposes you to several potential risks:
- Financial Stress: If one party can’t meet their obligations, the others must pick up the slack.
- Relationship Strain: Property decisions, unexpected expenses, or life changes can lead to friction.
- Difficulty Selling: Finding a buyer for one share can be challenging.
- Legal Disputes: Without a strong agreement in place, disagreements can escalate into costly litigation.
Real-Life Stories: The Good, the Bad, and the Ugly
There are many success stories of friends teaming up to buy their first home together and later selling to pursue solo investments. These partnerships allowed them to gain equity, experience, and confidence in the property market. However, there are also cautionary tales—disputes over renovations, tenant choices, or future directions have led some friends to court.
The common thread among both outcomes? The importance of preparation. Even when buying in high-demand areas with plenty of real estate listings near me to choose from, your agreement and legal framework make all the difference.
Tips for Successful Co-Ownership
Once you've bought a property with friends, the real work begins. Maintaining a healthy co-ownership arrangement takes ongoing effort, clear communication, and a proactive mindset. These tips can help you protect both your investment and your friendship over the long term.
- Keep communication open and honest
- Review your co-ownership agreement regularly
- Plan ahead for life changes
- Get legal, financial, and mortgage advice
- Prioritise the friendship alongside financial goals
Conclusion: Is Buying with Friends Right for You?
Buying property with friends can be a practical solution to overcoming the affordability crisis, especially when looking at houses for sale near me or exploring your local real estate listings near me. But it’s not a decision to be taken lightly. Trust, transparency, and proper planning are essential to success. At CM Lawyers, we provide end-to-end support—from helping you understand ownership structures to drafting a strong co-ownership agreement. If you're exploring real estate for sale or considering shared ownership of homes to buy near me, reach out to our team. We’re here to protect your interests and help you build a secure foundation for your property journey—together.
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