Property Co-ownership with Friends and Family

For many people, buying a home on their own is becoming increasingly difficult. One option is to buy with someone else, whether that is a partner, sibling, parent, friend or another family member. Pooling your deposits and borrowing capacity can make buying a property possible when it might otherwise be out of reach. But co-owning a home is a very different arrangement from simply buying a house with a partner. Before you commit to the purchase, it is worth thinking carefully about what happens not only while everything is going well, but also if one person wants to sell, stops contributing to the mortgage, loses their job, wants to move out, or simply changes their mind about the arrangement. We have seen co-ownership work very well, but the arrangements that tend to cause problems are the ones where everyone starts out with the best of intentions and assumes they will work out the details later.

Decide how the property will be owned

The first decision is how you will own the property. In New Zealand, co-owners generally hold property either as joint tenants or tenants in common. With joint tenancy, the owners hold the property together and do not have individually defined shares. An important feature is the right of survivorship, meaning that when one joint tenant dies, their interest generally passes to the surviving owner or owners. Tenants in common is often more appropriate where people are contributing different amounts or want their individual interests in the property to be clearly defined. For example, three siblings might own a property in shares of 50%, 30% and 20%. If one of them dies, their share forms part of their estate rather than automatically passing to the other co-owners. There is no one ownership structure that is right for every situation. It depends on who is buying, how much each person is contributing and what everyone wants to happen to their share in the future.

Put the agreement in writing

This is probably the most important step.

If you are buying with friends or family, do not rely on an informal understanding that “we'll just work it out”. A properly drafted property sharing agreement can set out how the arrangement will operate and what happens if circumstances change.

The agreement might cover things such as:

• how much each person is contributing to the deposit and purchase costs
• the ownership shares
• who is responsible for mortgage payments
• how rates, insurance, repairs and maintenance will be paid
• what happens if one owner pays more than their agreed share
• who can live in the property
• whether an owner can have a partner or flatmate move in
• how major decisions about the property will be made
• what happens if someone stops making their payments
• how the property will be valued if one owner wants to leave
• how one owner can buy out another
• what happens if nobody wants to buy the other person out and the property needs to be sold.

The New Zealand Law Society's Property Law Section guidelines specifically recommend discussing a separate agreement where property is being purchased by two or more people as tenants in common, including what happens if one of the owners wants to sell their share.

Agree what happens if someone wants out

This is the conversation that can feel unnecessary when you are excited about buying your new home, but it is one of the most important. Suppose two friends buy a house together. Three years later, one gets married and wants to buy a property with their new partner. Or one owner needs to move overseas for work. Or the owners simply decide they no longer want to live together. What happens then?

If the agreement does not deal with this, you can end up trying to negotiate a solution at exactly the point when your interests are no longer aligned. Before you buy, agree on how an owner's share will be valued, whether the other owner gets the first opportunity to buy it, how long they have to arrange finance and what happens if they cannot do so. You should also consider what happens if neither party can afford to buy the other out and the property needs to be sold. These details are much easier to agree when everyone is getting along.

Think about the money beyond the deposit

It is easy to focus on the deposit and mortgage and forget about everything else that comes with owning a property. Rates, insurance, maintenance, urgent repairs and improvements can all become significant expenses. If one person wants to replace the kitchen while another thinks the existing kitchen is perfectly adequate, you need to know how that disagreement will be dealt with. It is also worth agreeing what happens if one owner cannot make their mortgage contribution. The bank is concerned with the loan and the obligations of the borrowers, not with whatever private arrangement the co-owners have between themselves. Your co-owner's financial problems can therefore become your problem too.

Think about what happens if circumstances change

Buying with a friend or family member can also become more complicated if one of you enters into a relationship, separates from a partner or dies. For example, if you buy a property with your sibling and later enter into a relationship, your own circumstances may change considerably. Depending on the situation, the Property (Relationships) Act 1976 can become relevant to property interests when a relationship ends. This is one reason why the legal ownership structure should not be treated as a formality. Estate planning is also worth considering. If you own property as tenants in common, your share forms part of your estate when you die. Your will should therefore be consistent with what you intend to happen to that share.

Do not overlook the tax implications

There is also a tax side to co-ownership that should be considered before you buy. New Zealand does not have a general capital gains tax, but profits from selling property can be taxable under the bright-line test or other land-sale rules. For residential property sold on or after 1 July 2024, the bright-line period is generally two years, although exclusions and other rules can apply. There are also specific rules where the ownership shares change. For example, if one co-owner later buys out another, the disposal of the departing owner's share may have tax consequences. Inland Revenue specifically notes that changes to the shares held by co-owners, or adding or removing a co-owner, can potentially come within the bright-line rules.

If you are buying an investment property rather than a home to live in, the tax position can be different again. It is worth getting appropriate tax advice before making assumptions about how a future sale will be treated.

Get advice before you sign

Co-owning a property with friends or family can be a good way of getting into the property market, but it is not something to enter into on a handshake. The important thing is to have the difficult conversations before you buy. Who owns what? Who pays what? Who gets to make decisions? What happens if someone wants out? What happens if someone cannot pay? What happens if the relationship between the owners changes? Getting these matters agreed and documented at the beginning can save a great deal of stress later. At Conveyancing Shop Lawyers, we regularly help clients buying property with other people and can advise on the appropriate ownership structure and the legal agreement between the co-owners. If you are considering buying with friends or family, talk to us before you sign the Sale and Purchase Agreement so that you understand the arrangement you are committing to.

This article provides general information only and is not a substitute for legal or tax advice. Every co-ownership arrangement is different, so you should obtain advice based on your own circumstances before entering into any agreeement.

Reviewed by Michelle Erasmus 7th September 2026