Pooling your savings with a friend or family member to buy property sounds like a shortcut into the market. And in some ways, it is. But the legal and financial tangle that comes with it can turn a smart idea into a costly mistake if you don’t plan for the worst-case scenario from day one. Recent research suggests that while co-buying can get you into a home sooner, the main risk people cite is the potential damage to their personal relationships.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The appeal is obvious. Two or three incomes can unlock a property in a better suburb or a larger home than any one person could afford alone. But the same arrangement that makes the purchase possible also ties your financial future to someone else’s decisions. Here’s what you actually need to know.
The central concept here is tenancy in common. Unlike joint tenancy (where ownership passes automatically to the survivor), tenancy in common lets each person own a specific share — say 50/50 or 60/40 — and sell or bequeath that share independently. That flexibility matters when you’re investing with someone who isn’t your spouse.
What I tend to notice is that most people focus on the excitement of buying together and skip the hard conversation about what happens when one person wants out. That’s the part that costs real money.
What the full cost picture looks like when buying with others
The headline benefit is obvious: you can afford more property. But the costs that follow are shared unevenly depending on how you structure the ownership. The purchase price is only the start.
Stamp duty, legal fees, and conveyancing costs are split according to each person’s ownership share. But if one co-owner has a lower income or less savings, they may struggle to cover their portion of ongoing costs like council rates, strata levies, or emergency repairs. That can create tension fast.
Mortgage rates also depend on the combined financial profile of all borrowers. If one person has a weaker credit history, the whole group may face a higher interest rate. On the flip side, pooling incomes can reduce the perceived risk to the lender, potentially securing a lower rate than any individual could get alone.
There’s also the question of capital gains tax. When the property is eventually sold, each co-owner is taxed on their share of the gain. If one person lives in the property and another doesn’t, the main residence exemption may only apply to the occupant’s share, leaving the investor co-owner with a tax bill they didn’t expect.
For anyone considering this path, getting independent legal and financial advice before signing anything is the single most important step. Services like JustAnswer Real Estate Law can help clarify ownership structures and exit clauses before you commit.
Four mistakes that sink co-buying deals
No written agreement on what happens if someone leaves
The most common error is assuming your friendship or family bond will carry you through any disagreement. It won’t. Without a co-ownership agreement that spells out what happens if someone wants to sell, moves overseas, or can’t pay their share, you’re relying on verbal promises that have no legal weight. A properly drafted agreement should cover buyout formulas, notice periods, and what happens in case of death or bankruptcy.
Ignoring how co-ownership affects future borrowing
When you co-own a property, the full mortgage debt appears on your credit file — even if you only own 30% of the property. That means when you later apply for a home loan of your own, the lender sees the entire debt, not just your share. This can severely limit your borrowing capacity. Many co-buyers don’t realise this until they try to buy their next property.
Assuming first home buyer benefits still apply
First home buyer concessions like stamp duty exemptions or the Home Guarantee Scheme can still apply when buying with friends or siblings, but the rules vary by state and by scheme. Some schemes require all buyers to be first-timers. Others disqualify you if any co-owner has previously owned property. Checking eligibility before you commit can save you thousands.
No plan for unequal financial contributions
If one person puts in a larger deposit or earns more, the ownership split should reflect that — but it often doesn’t. Without a clear agreement, the person who contributed more may end up with the same ownership share as someone who contributed less. That’s a fast track to resentment. A tenancy in common arrangement with clearly defined percentage shares avoids this problem.
How to structure a co-buying deal that actually works
Choose the right ownership structure
Tenancy in common is almost always the better option for co-buying with friends or extended family. It allows each person to hold a specific percentage share and to sell or bequeath that share independently. Joint tenancy, which passes ownership automatically to the survivor, is designed for couples and can create complications if one co-owner dies or wants out.
Draft a co-ownership deed before you exchange contracts
This is the legal document that governs how the property is managed. It should cover: each person’s ownership percentage, how ongoing costs are split, who can live in the property, how decisions are made (majority vote or unanimous), and a detailed exit process. Without this deed, you’re relying on default property law, which may not reflect your intentions at all.
Set up a joint mortgage with clear terms
Most lenders require all co-owners to be on the mortgage. That means each person is jointly and severally liable — if one person stops paying, the lender can pursue the others for the full amount. Some lenders offer shared equity loans or co-borrower products, but these are less common. A mortgage broker can help you find a product that matches your specific co-ownership structure.
→ Scroll right to see all columns
| Ownership structure | Best for | Key risk |
|---|---|---|
| Tenancy in common | Friends, siblings, investors | Requires formal deed to work well |
| Joint tenancy | Married couples, de facto partners | Survivorship rules can conflict with investment goals |
| Company or trust | High-net-worth investors, multiple properties | Higher setup and compliance costs |
Plan for the exit before you enter
The most important conversation you’ll have is about how one person leaves. Will they sell their share to the remaining co-owners? At what price — market value or a fixed formula? How long do the others have to buy them out? What happens if nobody can afford to buy the share and the property must be sold? These aren’t hypotheticals. They’re the questions that determine whether the arrangement survives a change in circumstances.
What’s changing in co-ownership rules
The Australian government has expanded the Home Guarantee Scheme to include buyers with friends or siblings, which is a significant shift. Previously, the scheme was limited to singles, couples, or single parents. This change makes co-buying more accessible, but it also means more people are entering these arrangements without fully understanding the legal and financial implications. Expect further regulatory attention on co-ownership as it becomes more common.
Frequently asked questions about buying property with friends
Can I use my first home buyer grant if I buy with a friend? ▾
What happens if one co-owner stops paying the mortgage? ▾
Can I sell my share without the other owner’s permission? ▾
What happens if one co-owner dies? ▾
Do I need a lawyer to set up a co-ownership agreement? ▾
Can I rent out the property if one co-owner wants to live there? ▾
Co-buying works when the hard conversations happen first
The difference between a successful co-buying arrangement and a costly one comes down to one thing: how thoroughly you planned for the possibility that things go wrong. The research is clear that the main risk people identify is damage to their relationships, not financial loss. But financial loss follows when relationships break down and there’s no legal framework to manage the split.
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 How to Use a Self-Managed Super Fund to Buy Property in Australia.
Sources and Further Reading
The Smart Investor’s Guide to Regional Australian Property — A deeper look at how to evaluate property markets when you’re not buying alone.
How to Find Undervalued Properties in Australia Before They Skyrocket in Price — Practical strategies for spotting value, whether you’re buying solo or with others.
Aus Property Professionals (2025). Investing with Friends and Family: The Good, The Bad, The Ugly. 🔗
Savings.com.au (2025). Should You Buy a Property With a Friend or Family Member? 🔗
Finder.com.au (2025). Buying a Property With Someone Else. 🔗
Aus Property Professionals (2024). Buying Property With Family & Friends. 🔗
