Sharing the cost of house purchase

Due to the cost of living crisis, the mortgage situation and general concern for an uncertain financial future, couples and families are now finding themselves purchasing properties with their parents. The idea is to help couples get on to the property ladder whilst allowing them to afford a family-sized property.  In return the parents will have a home and ‘live in’ care should they need it in their later years.

Although a great solution to both of these issues, this arrangement can cause all kinds of problems unless the terms of the purchase are agreed. If clarification of ownership is needed, a Declaration of Trust can be drafted which confirms the percentages of ownership. It can also state whether the owners wish their share to pass to their spouse or others (owning the property as joint tenants-in-common) or to be shared equally between the remaining owners of the property (owning the property as joint tenants).

If a co-owner wishes to direct their share to a specific person then a Will is required to state as to where that share is to pass upon death. For example, if a couple co-own their property with one daughter and her family, whilst their other daughter lives separately, careful consideration is required in order to ensure that both daughters are treated equally, if that is the parents’ wish. Therefore, the value of other assets will need to be considered as to what will be ‘fair’.

Another potential issue to consider is what should happen if a co-owner were to separate from their spouse? The spouse’s share of the property could become part of the financial agreement for a divorce, so where does that leave the remaining owners?

Also, what will happen if a parent needs to go into care? Will there be an agreement with the care home to lodge any fees against the share of that parent? Are there enough funds without having to consider the share of the property for care home fees?

If you are considering purchasing a property with another family member, do contact our Wills and Probate department.