Pooling resources: Could co-ownership be the answer to property affordability?

For generations, buying a property has often been seen as something you do with a partner or spouse. But for some New Zealanders, the path to ownership looks a little different.

With property prices, deposits and lending requirements creating many challenges for individual buyers, purchasing alongside a family member or friend/s can make a property that once seemed out of reach more achievable.

In the rural sector, co-ownership isn't a new concept - equity partnerships have long allowed multiple people to join forces to buy and operate a farm. But the idea is increasingly relevant beyond the paddock gate, with shared ownership potentially offering a way for buyers to increase their purchasing power.

Friends are pooling deposits to buy a first home. Parents and adult children are purchasing property together. Siblings are combining resources to secure a larger property than either could afford individually.

So how do these kinds of arrangements look in the everyday and could co-ownership be the future of home ownership?

Pictured: Brent Irving, a Rural and Lifestyle Consultant in Otago. 

Could buying together help you achieve more than buying alone?

For Brent Irving, a Rural and Lifestyle Consultant in Otago for PGG Wrightson Real Estate, co-ownership has long been part of the farming landscape.

"Families do buy farms together and equity partnerships are also relatively common in the rural sector, with several parties pooling their resources to acquire a larger farming operation than they could afford individually.”

And while Brent hasn't seen a dramatic increase in co-ownership in his part of the market - as it’s often the ‘norm’ - he says there are good reasons why the model continues to appeal.

Of course, the most obvious benefit of buying with someone else is the ability to combine financial resources. Two or more buyers may be able to contribute larger deposits, meet lending requirements more comfortably or purchase a property with greater potential than they could manage alone.

Rurally, this can mean acquiring a larger farm and creating an opportunity to build a business with greater scale. But the same principle can apply to residential, lifestyle and investment property.

For families, co-ownership can also provide an opportunity to create a multigenerational living arrangement. Brent points to elderly parents as one example, with changing rules around building additional accommodation making it easier in some circumstances for families to create more flexible living arrangements on a property.

There can be another advantage too - bringing together different skills, experience and resources. One person might have greater financial expertise, another practical or property knowledge, while someone else might bring business or management experience.

When those strengths are combined effectively, the partnership can be more capable than any individual owner acting alone.

Buying into a property together is only the start of the journey… how will it end?

The biggest mistake prospective co-owners can make is concentrating on how they will get into the property without thinking about how they will eventually get out.

"If you can't get out when you want to, that's one of the biggest issues," Brent says.

A shared property purchase needs an exit strategy from the outset, so it’s important to ask questions such as - what happens if one person wants to sell in three years but the others want to hold for 10? What if someone's financial circumstances change? What happens if the relationship between the owners breaks down, or one owner wants to invest further while another doesn't?

These aren't necessarily reasons not to buy together. But they're reasons to have the difficult conversations before signing on the dotted line.

Brent says co-owners need to agree on their long-term goals (where possible) and consider what they want the arrangement to look like in one, three, five and even 10 years' time.

There can also be challenges when several owners have different strategies, priorities or expectations. This is particularly important when the property is also a business, but it applies to any shared purchase.

Choosing to buy together is one decision, staying aligned is another

Trusting the people you're buying with is important, but it isn't enough.

A clear legal agreement should establish who owns what, how decisions will be made, how costs and profits will be shared, what happens if someone wants to leave, and how an eventual sale will work. Because while sharing the cost can make property ownership more achievable, sharing the decision-making (and formalising it in documentation) is what will determine whether the arrangement works.

In a business or investment arrangement, a formal shareholders' agreement may also be appropriate.

Is co-ownership the future?

Whether co-ownership becomes a much larger part of the New Zealand property market remains to be seen. It isn't necessarily a new trend so much as an established approach that can become more attractive when affordability is challenging.

In rural property, equity partnerships have demonstrated that pooling capital can give people access to opportunities that would otherwise be beyond their reach. And that broader idea could become increasingly relevant across the property market - if buying alone isn't realistic, could the answer be finding the right person, or group, to buy with?

For anyone considering co-ownership, the key is to see it as more than simply combining deposits or borrowing capacity. It’s a long-term partnership involving money, property and relationships, so as long as you establish clear goals, put the legal framework in place and agree on how the arrangement can eventually end - it is possible.

Benefits of buying property with friends or family

• Greater buying power: Combine deposits and incomes to access properties that may otherwise be out of reach.
• Share the costs: Split mortgage repayments, rates, insurance and maintenance expenses.
• Enter the market sooner: Co-ownership can make property ownership more achievable without waiting years to save a larger deposit.
• Access bigger opportunities: Purchase a larger home, lifestyle property or investment than you could afford alone.
• Share skills and responsibilities: Combine financial, practical or property knowledge to make informed decisions.
• Build wealth together: Share in any long-term capital growth and equity.

Challenges of buying property with friends or family

• Different goals: Owners may disagree on when to sell, renovate or invest further.
• Exit can be complicated: One person wanting out doesn't always mean the others are ready or able to buy them out.
• Shared financial responsibility: If one owner can't meet their commitments, it can affect everyone.
• Decision-making can take longer: Major decisions require agreement between multiple owners.
• Relationships can be tested: Financial disagreements can put pressure on friendships or family relationships.
• Legal complexity: A clear legal agreement and ownership structure are essential to protect everyone involved.

Whether you're taking your first step onto the property ladder or pooling resources for something bigger, your local PGG Wrightson Real Estate agent can help you explore the possibilities. Get in touch with us today!