buying a part-share - a decent investment?

jackyann

A young relative is struggling to buy a flat in London, and we could possibly help.
We could:
lend the extra deposit money needed (and yes, having followed this forum, I'd get it drawn up properly!)
or join in the purchase, so we owned a % of it.
Would the latter option be a good idea? We have already thought that if we did that, we'd make sure it was somewhere "nice" with a good likelihood of re-sale.
Would like the good people here to give their opinion on the pit-falls, or maybe the upside (I've already thought of stopping over!)

poppysarah

Define investment?

• The action or process of investing money for profit or material result.
• A thing that is worth buying because it may be profitable or useful in the future

or
3. A surefire route to falling out over money, losing the money, destroying friendships, and ending up wishing you'd never got involved.




The more people help prop up house prices by supporting insane schemes that people can't even afford to part buy then the longer the situation will go on.


Just say no.

jackyann

Thanks poppy - I never know how much detail to put in. This young person can definitely afford repayments on a small flat, and is in a job that is as secure as possible in these times, but is struggling for the kind of deposit usually asked. We would not be looking for a great return on our "investment" but would hope to avoid a loss.
But I do take #3 on board!

poppysarah

You should play it out in your head how it works out:

- prices increase, so they can sell for more. but by selling for more they are expected to pay you back *what*? and then could they afford to buy another place

- prices stay the same - depending on how much they've paid off, could they afford to pay you anything back if they move?

- prices drop ... and they want to move - how will that work out?

What if they got married and then divorced? Would the deposit be 'theirs' or a 'gift' or a 'loan' ... it might get gobbled up by family chaos.

It's very difficult and I know you probably only want to help, but sometimes money is the wrong help.

JQ.

Lend the money and don't get involved, I speak from experience.

If you own a % of the flat are you intending to pay the same % of all maintenance bills for the property, potentially for the 30yrs.

Buying a property is a very personal experience, and it sounds like that if you lend them the money you actually intend to influence what they buy. That sounds a terrible idea and one that will end in lots of arguments.

Gonzo33

My Mum lent me money to buy my house and put a charge over the property as a lender would. She had to sign a deed of postponement as she was the second charge

Yorkie1

If it is a loan then the young person will need to declare it to the lender in the mortgage application - to do otherwise would be fraud.

If you are proposing a joint mortgage application (not clear to me whether you are, but let's go with it) then you would be jointly and severally liable for all the mortgage costs.

Gonzo's idea is worth exploring if it is still acceptable in today's lender's market.

Richard_Webster

People can have a touching faith in the law and think that it is just a matter of making sure the right wording is any agreement.

You need to look at these scenarios that Poppysarah mentioned:

- prices increase, so they can sell for more. but by selling for more they are expected to pay you back *what*? and then could they afford to buy another place

- prices stay the same - depending on how much they've paid off, could they afford to pay you anything back if they move?

- prices drop ... and they want to move - how will that work out?

What if they got married and then divorced? Would the deposit be 'theirs' or a 'gift' or a 'loan' ... it might get gobbled up by family chaos.

Remember, if you have to enforce a sale, if the other people do not want to sell you have to go to court which can be expensive, time consuming, and stressful. There is no magic agreement wording that causes the others instantly to do what you want!