IN today’s overpriced property market, many singletons in search of a home are merging their finances with friends, siblings and partners.

“It is not unusual to see a party of two or three people in their early twenties clubbing together to buy a house,” said James Byrne, a director of ezhome.ie, a mortgage broker and adviser.

“It is particularly important in such cases to advise the buyers to draw up a detailed agreement, as their personal circumstances inevitably will change significantly before they reach 30,” he said.

The age profile of first-time buyers has dropped over the past three years as incomes have risen. According to Olive Moran, the head of mortgages at Bank of Ireland, 20% of joint mortgages were taken out by single people last year.

The risks involved in pooling your resources with a pal are high, experts say. Apart from losing a great friendship, co-purchasers also risk suffering substantial financial loss.

With house prices continuing to soar, however, this popular trend looks set to continue. Permanent TSB figures show that, in the second half of 2005, house prices grew at twice the rate they did in the first six months. Prices shot up by 12.2% last year and the average house price is now €250,000.

“There has been a marked increase in boyfriends and girlfriends, friends and siblings joining up to buy homes.

Siblings, in particular, tend to favour this strategy of getting a foot on the property ladder,” said Sarah Wellband, a director at Rea Mortgage Services.

The main risk when buying with another person who is not your spouse is that you do not benefit from any of the legal rights and protection that a husband and wife enjoy.

The co-buyer may decide to sell before you feel that the time is right. In such an event, unless a legal agreement has already been drawn up, both parties may end up fighting it out in court. “We always advise people to draw up a co-ownership agreement if they are making a joint purchase,” said Wellband. “It’s highly unlikely that both parties will want to keep the house for the next 30 years, so it is important to make provisions for every eventuality.”

There are several topics to be discussed and agreed: how much equity in the property is owned by each party; what percentage of the monthly mortgage payments each contributes; whether one party can obtain an order of sale to force the property to be sold; what should be done if one party dies; how much each person pays towards the deposit.

“When both parties are paying equal amounts towards the deposit and mortgage repayments, the legal side of things is very straightforward,” said Wellband. “However, this is often not the case, so it is important to ask your solicitor for help in making the property purchase as fair as possible.”

Other factors to be considered include: should one of the owners be offered first refusal if the other wants to sell their share? What happens if one person wants to move out and rent their room? Minor details such as bills, repairs and insurance can often be overlooked, but there is no harm in including them in the agreement so that there is no confusion when it comes to working out the finances.

According to Moran, disputes between co-purchasers are becoming increasingly common. “Problems arise when somebody has a baby or loses their job and wants to sell their share of the property,” she said.

Most parties opt for joint title when buying a house and, according to Moran, the majority of people settle for the one solicitor to act in the interest of both buyers. “All borrowers will have a solicitor acting for them in the transaction who covers both the purchase and the mortgage,” she said. “As a rule, borrowers opt for the same solicitor as it reduces the overall cost. However, in the event of joint borrowers with sole title, we strongly advise both borrowers to obtain independent legal advice. If they decide not to proceed with independent legal advice, we insist that they sign a confirmation of understanding.”

Moran adds that the bank strongly advises borrowers to understand the nature of the ownership, whether they are tenants in common or joint tenants. Tenants in common means that ownership can be registered proportionately or equally, for example, at 60/40 or 50/50. Joint tenants means that borrowers have an equal interest in the property. In the event of the death of one of the borrowers, the legal interest automatically passes to the survivor. This is the most common form of ownership for most people.

Wellband recommends that joint buyers go online to the independent website Askaboutmoney.com, where they can access a draft mortgage agreement.

There are a number of provisions drawn up in the agreement. For example, in the event of one party being unable to pay the mortgage, the other person can charge interest at the mortgage rate plus 2% if they have to take on extra mortgage repayments as a result. If one party is in arrears on the mortgage for more than six months, the other person has the option of treating it as notice of their intention to terminate the agreement. This may seem harsh, but when you consider that the alternative is to battle it out in court, a legal agreement covering all eventualities makes sense.

Price Guide 2006 will be published next week in Home