Further to yesterday’s blog, it seems a day doesn't pass without some form of survey on house prices. The Nationwide Building Society has said that its latest monthly survey shows that the amount by which house prices are increasing fell by 0.5% this month to 6.6% per year. It is believed that the price of the average home is now £169,347, almost the same as it was in July 2008.
It seem this survey is saying that house prices are now back up to 2008 levels which is good news. Whichever assessment is right it certainly seems that the housing market is taking a step in the right direction.
As advised yesterday this is a hopeful step and should allow home owners to sell their properties or even allow the transfer of a property from joint names into a person’s sole name. This will allow separating couples to move on and purchase other properties or simply obtain the equity they need to clear their debts and start afresh.
Whilst however it is good news for those who already have a property it is not the same case for first time buyers. Property prices increasing and with very few lenders refusing to give mortgages without at least a 10% deposit is making it difficult for those first time buyers. Care should be taken by those buyers when using financial backing from relatives and friends to enable them to purchase a property. It may be the case that the money lent is a gift or alternatively loaned. In either case an agreement should be prepared to specify whether the money is to be repaid and how.
I have come across many cases where one person has paid the deposit and the property is owned in another’s sole name. Without proof of the agreement when the money was given the person who paid the deposit could come back later and attempt to prove an interest in the property as they have contributed to the purchase. This could lead to a lengthy and costly court case which is probably not what most owner’s of property want to happen, especially in the current financial climate. An agreement drafted on purchase will stop any future issues arising and will give the owner comfort of knowing their property is secure.
Agreements such as these can also give the lender security of knowing they will have there money returned on sale of the property or at any other time as agreed between the parties. I have dealt with many disputes where a property has been purchased in the joint names of a couple and one of the party’s parents has lent them a sum of money for the deposit. What would happen on the breakdown of the relationship? Well without an agreement in place it is likely the equity in the property will be divided equally between the couple giving one party effectively a half share of the deposit which the other party’s parents probably didn’t want to happen.
Stephensons specialise in all types of cohabitation agreements that will protect all parties’ interests whether prepared at the outset of a relationship, on purchase of a property or in respect of a breakdown of the relationship.