Australian property loan commitments hit $103.0 billion in the March quarter of 2026, according to ABS data cited by WealthWorks. That’s a lot of people signing up for mortgages, and a growing number of them are signing up together — friends, siblings, colleagues pooling deposits and incomes to get a foothold. The intentions are good at the start. The paperwork rarely is. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Co-buyers typically have clear intentions at purchase and a verbal understanding of who pays what — and no documentation of any of it. Peakifi’s guidance notes that problems surface later when one person wants to sell, can’t meet repayments, a relationship breaks down, or a co-owner dies. Without a written agreement, resolution can involve lengthy and costly legal disputes. A co-ownership agreement provides a framework and reduces the likelihood of costly litigation.
If you’re buying with someone who isn’t your spouse or de facto partner, you don’t have family law protections to fall back on. That makes the agreement not just sensible but arguably the most important document you’ll sign after the mortgage itself. For a broader look at the current market, you might also read our honest Aussie home-buying guide.
What Happens When There’s No Agreement
Without a co-ownership deed, you fall back on general property law. That means if a dispute arises — one owner wants to sell, the other doesn’t — the only remedy may be a court application for partition, which is a forced sale. This is expensive, slow, and stressful. Peakifi describes it as “lengthy and costly litigation” that a simple written agreement could have avoided.
For married or de facto couples, the Family Law Act 1975 provides a framework for property division on separation. But for friends, siblings, business partners, or non-cohabiting investors, there’s no such safety net. The default legal position is that any co-owner can apply to the court to force a sale, regardless of whether the other owner wants it. That’s a blunt instrument, and an expensive one.
The Building Blocks of a Solid Co-Ownership Deal
The most common ownership structure for co-buyers who aren’t spouses is tenants in common. Each person holds a defined interest — equal or unequal — and that share can pass under their will rather than automatically to the other owner. That’s crucial if you have separate families or estate plans.
Joint tenancy, by contrast, includes the right of survivorship — when one owner dies, their interest passes automatically to the surviving owner. WealthWorks’ guidance notes this can suit spouses who intend the survivor to own the home, but it may be unsuitable for friends with separate families and estate plans. If you’re buying with a non-partner, hold as tenants in common with a co-ownership deed.
What Your Agreement Needs to Cover
A well-drafted co-ownership agreement typically addresses seven areas. The more specific you are now, the less room there is for interpretation later.
Ownership Shares and Contributions
Each party’s percentage of ownership should be consistent with the tenants in common title. Document how contributions are calculated — deposit, stamp duty, renovation costs. WealthWorks gives a worked example: two friends buy a $900,000 home. Buyer A contributes $120,000, Buyer B contributes $60,000. They borrow $720,000 and split repayments equally. The illustrative title share works out to 58.3% for A and 41.7% for B, treating the deposit plus each person’s half of the initial loan principal as capital exposure. Other arrangements are possible — what matters is documenting whether the larger deposit is equity, a loan between owners, or a contribution to be returned first on sale.
Financial Obligations and Repayment Sensitivity
Who pays what portion of mortgage repayments, rates, insurance, and body corporate fees. What happens if one party can’t meet their share. How an offset account or extra repayments are handled. WealthWorks models the repayment sensitivity for a $720,000 loan over 30 years:
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| Interest Rate | Monthly Repayment | Each Owner’s Share |
|---|---|---|
| 5.75% | $4,202 | $2,101 |
| 6.25% | $4,434 | $2,217 |
| 6.75% | $4,670 | $2,335 |
| 7.25% | $4,911 | $2,456 |
At 7.25%, each owner pays about $355 more per month than at 5.75%. Rates, insurance, council charges, utilities, repairs, and strata must all be stress-tested. A six-month joint emergency reserve may prevent a short-term income loss from becoming a forced sale.
Decision-Making and Occupancy
List decisions requiring unanimity — refinancing, fixed rates, large renovations, leases, and sale. Set a lower dollar threshold for routine repairs. Include emergency authority for urgent work. Specify who may live there, whether partners can move in, how bills change, whether rooms can be rented, and whether pets are allowed. If one owner moves out, decide whether that person can rent their room and whether the remaining owner pays occupation rent.
Exit, Valuation, and Buyout
Every agreement needs an exit process even when nobody plans to leave. Common stages from WealthWorks’ guidance: an owner gives 60 days’ written notice; a jointly appointed certified practising valuer determines market value; the other owner has 30 days to accept a buyout; finance approval is required within a further 30 days; if settlement can’t occur, the property is listed with an agreed agent; sale costs and mortgage are paid, documented owner loans are repaid, and equity is split by the agreed formula.
Default Provisions
Define missed payment notice periods, temporary hardship, use of reserve funds, interest on amounts covered by the other owner, and a final default mechanism. Peakifi’s guidance notes that a co-ownership agreement creates rights between co-owners to recover costs — it does not affect the lender. The lender can still pursue all borrowers for the full debt regardless of what the private agreement says.
Death Provisions
Does the deceased’s share pass to the estate or to the surviving co-owner? This is determined by the tenants in common structure. The agreement should be consistent with and reference the will. Consider life, total and permanent disability, trauma, and income-protection needs. If one owner dies, can the survivor service and refinance the loan?
Refinancing and Further Encumbrance
Can one co-owner refinance or mortgage their share independently? Peakifi notes this may not be possible in practice — lenders typically require all owners’ consent. The agreement should address whether co-owners can use their share as security for other borrowing.
Where Co-Buyers Usually Get Stuck
The research points to several recurring gaps that turn a promising co-purchase into a legal headache.
Assuming a Verbal Agreement Is Enough
Co-buyers typically have clear intentions at purchase and a verbal understanding of who pays what — and no documentation of any of it. Without a written agreement, you fall back on general property law, which may require a court application for partition to resolve a dispute. Peakifi’s guidance is blunt: a co-ownership agreement reduces the likelihood of costly litigation. Get it in writing before you become unconditional.
Not Stress-Testing Repayments
The repayment sensitivity table above shows how much a rate rise of 1.5 percentage points adds to monthly costs — roughly $355 more per person per month on a $720,000 loan. WealthWorks advises modelling repayments at least two percentage points higher than the current rate. Rates, insurance, council charges, utilities, repairs, and strata must all be stress-tested. A six-month joint emergency reserve may prevent a short-term income loss from becoming a forced sale.
Ignoring the Tax Consequences
The ATO generally requires co-owners who are not carrying on a rental-property business to declare rental income and expenses according to their legal ownership interests. A private agreement can’t ordinarily redirect a 50% registered ownership share into a 20% tax share. Interest deductibility depends on the use of borrowed funds, not merely the property used as security. Borrowing against a rental property to pay for a private holiday does not ordinarily make the holiday debt interest deductible. Keep the purchase contract, settlement statement, duty, legal fees, improvement invoices, ownership records, and valuations — these may be needed years later to establish the CGT cost base.
Forgetting About Future Borrowing Capacity
Even if the private agreement assigns half the debt to each owner, another lender may assess each for some or all of the joint liability when they later seek credit. WealthWorks notes this can restrict a future car loan, investment purchase, or home purchase with a partner. The joint liability doesn’t disappear just because you have a private agreement between yourselves.
Overlooking First-Home Buyer Rules
Co-buying can interact awkwardly with the Home Guarantee Scheme, First Home Owner Grant, and state duty relief. Programs apply ownership history, residence, income, property-value, and participant tests — one ineligible co-buyer may affect everyone. WealthWorks advises checking before signing because a concession can’t always be reconstructed after settlement. Use current Housing Australia guidance and the relevant state or territory revenue office.
Frequently Asked Questions
Do I need a co-ownership agreement if I’m married or in a de facto relationship? ▾
What happens if one co-owner stops paying the mortgage? ▾
Can I sell my share without the other owner’s permission? ▾
How is capital gains tax handled when co-owners sell? ▾
Does a co-ownership agreement affect my ability to get a loan later? ▾
How much does a solicitor-drafted co-ownership agreement cost? ▾
Treat Co-Ownership Like a Business Partnership
Buying with friends or family can turn two partial deposits and incomes into a viable purchase. The price is interdependence: each person’s credit, cash flow, relationships, estate, and future borrowing become connected. The strongest case here is to treat the arrangement like a business partnership — put the uncomfortable scenarios in writing while the relationship is strong, use conservative numbers, and make exit possible without a courtroom. A co-ownership agreement doesn’t just protect the property; it protects the relationship.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Tips for buying a house and lot bundle in Australia.
Sources and Further Reading
Tips to navigate property flipping tax rules in Australia — Tax treatment of property sales, relevant if your co-owned investment is held for a shorter term.
Peakifi (2025). Co-Ownership Agreement Guide. 🔗
WealthWorks (2026). Buying Property With Friends Australia 2026: Co-Ownership Agreement, Tax & Loans. 🔗
GenieAI (2026). Co-Ownership Agreement Template — Australia. 🔗
GenieAI (2026). Property Co-Ownership Agreement Template — Australia. 🔗
PandaDoc (2025). Property Co-Ownership Agreement Template. 🔗
CreateMySignature (2025). Property Co-Ownership Agreement Template. 🔗
