Great idea, but do your homework..
Housing affordability is tough. Teaming up to buy a house makes sense. But without proper legal protection, your BFF could become your BTF (Biggest Transaction Failure).
Remember when you could buy a house without selling a kidney?
Despite some improvements for first-home buyers, New Zealand’s housing market remains “severely unaffordable” with median prices still crushing wallets at 8.2x median income, according to the latest Demographia Housing Affordability survey.
Enter the co-buying revolution: Friends and family members joining financial forces to crack the property market. But experts warn this isn’t just about pooling cash for avocado toast money — it’s a legal partnership that needs serious homework.
Friendship stress test
Amy Stevens, founder of Slice (a platform helping first-home buyers navigate this maze), dropped some truth bombs on The Herald’s Prosperity Project podcast:
“It’s not about going ‘oh, we can afford to do this.’ That’s not enough. Should you do it? Are you the right people to do it together?”
The reality check every friendship needs before signing mortgage papers together:
- You’re on the hook for EVERYTHING: If your friend defaults, congratulations! You now own their half of the debt. Banks don’t care who missed payments; they’ll come after whoever still has a pulse (and assets).
- Exit strategies matter: Your five-year property flip could be their forever home. Without alignment, someone’s getting disappointed (or worse, lawyered up).
- Life happens fast: Babies, promotions, relationships, relocations. Your stable living situation can transform overnight when your co-owner’s life plans change.
Co-buying success story
Ali and Josiah Ventura took the plunge with friends several years back. Their approach? Assume everything could go wrong, then plan for it:
“We drafted up this legal document and essentially… we just asked each other all these questions,” Ventura told The Prosperity Project. “What if one of us has a baby? What if one of us dies? What if we break up? What if we have a falling out?”
The result? They love living with their best friends and now their infant son. The only regret? “We wish we hadn’t bought at the peak… it’s simply not worth what we paid for it at the time.”
(Timing the market: still impossible, even with friends.)
Five co-buying tips your lawyer won’t tell you about
- Test-drive before you buy. Rent together first. Seriously. Finding out your friend’s 5am workout routine involves chanting and incense AFTER you’ve co-signed a mortgage is… suboptimal.
- Set up a dedicated “house emergency” fund. Each contributor puts 3-6 months of mortgage payments in a joint account that nobody touches except for property emergencies. This prevents one person’s temporary cash flow issues from becoming everyone’s problem.
- Create a “right of first refusal” clause. If someone wants out, the remaining owners get first dibs on buying their share before it goes to an outsider. Price the deal using an agreed-upon third-party valuation method.
- Document EVERYTHING you bring in. That $5,000 TV you bought? Get it in writing that it’s yours if you move out – or agree on depreciation schedules for major purchases.
- Buy as tenants in common, not joint tenants. This structure allows different ownership percentages and lets each owner decide who inherits their share. Joint tenancy automatically passes ownership to surviving owners (potentially cutting out your actual family).
By the numbers
30% — Increase in co-ownership mortgage applications in NZ since 2022
78% — Success rate of co-buying arrangements that had formal legal agreements in place
$187,000 — Average deposit savings when four adults purchase together vs. a couple
41% — Co-buyers who eventually buy out their partners within 5 years
Alternative models gaining traction
While friend-buying gets attention, these alternative models are also helping Kiwis crack the market:
Rent-to-own schemes: Companies like YouOwn and Kainga Ora’s First Home Partner offer shared equity models where they own a portion of your home until you can buy them out.
Baugruppen: German-style “building groups” where future residents collectively develop an apartment building, saving 15-30% on costs by cutting out developer profits.
Family equity loans: Parents guarantee a portion of the loan without contributing cash, effectively lending their equity without touching their retirement funds.
Final thought
In housing, as in marriage, the prenup nobody wants to discuss is exactly the one everyone needs.
Get your posse together and call 0800 GOODWINS to find your dream co-owned home.
