Seven rules for co-owning a holiday house
WHILE buying a shared holiday house can require a fair amount of research, it is often an excellent way for a families to get into the property market. But you’ll need to set down some ground rules from the get-go, or things can go pear shaped, even for the closest of clans. Not only is it cheaper to buy and secure the property when you’re co-owning, but you’ve also got a permanent holiday destination, saving thousands on accommodation bills each year.
There is the small factor of the mortgage that will need paying off, but in a group the repayments will obviously be much lower. Or you may even find yourselves in a position where together, you can buy the property outright. If so, you’re a very lucky bunch indeed, and you should go and buy that dream holiday house right now.
However as with all family affairs, there will be some problematic elements to sharing a holiday house. In order for the group to co-own in harmony, it’s essential for some solid rules to be put in place, or else you could find things ending in disaster.
Lucky for you, we’ve come up with seven rules that will help you and your co-owners, be it parents, siblings or friends, enjoy your dream holiday home for many, many years.
1. Set up some ground rules
In order for a shared arrangement to work, all parties need to be on the same wavelength with how the property should be used, and all parties should get along reasonably well or it won’t work. “We usually see families in co-ownership because the legality of it can be quite complicated,” Cathy Baker from Belle Property Killcare said. “A lot of people won’t co-own because of the legal restrictions, but I’d recommend speaking with a financial advisor because there are definitely ways to do it. With numerous questions and scenarios to discuss, such as how often the families stay at the property, and whether to let the property out during peak periods, it’s important to put everything on the table.
Even details as simple as the furnishing will need to be discussed.
2. Be flexible
If you’re going to invest in property with a group, you need to have some flexibility or it won’t work. “Some weeks such as Christmas and Easter are more prized than others, but by taking a commonsense approach, it’s possible to come to a solution that’s suitable to all parties,” Mr Raine said. “It might be that those family members who can be more flexible with their time, may be able to stay at the property in non-peak times.
If groups are using the property for their own leisure, a fair use agreement should be arranged. “I’ve got a brother and sister who co-own in Killcare, and they have a roster system for equal use. “They take advantage of peak season and rent the property out during the most lucrative times, and then divide the use between themselves during the quieter times,” Ms Baker said.
3. Contribute to a sinking fund
Financial contributions towards the ongoing costs of owning a home should be fair and equal, hence the need for a sinking fund. “Contributing to a sinking fund is one method to ensure there is a kitty for repairs and maintenance,” Mr Raine said. “This is an arrangement used in strata properties, where all owners contribute an amount to upkeep. The contribution each owner makes to the sinking fund could be determined by how often they use the property.”
4. Set up a roster
5. Agree on cleaning and linen
Mr Raine said that a holiday home should be left in an orderly way to minimise possible conflict. A great way to ensure that this is consistent is to pay for a cleaner, as people’s cleaning standards can vary. “To make certain the home is spotless for every new arrival, all owners could agree to pay for a professional cleaner whenever they exit the property,” said Mr Raine.
“Dirty linen should also never be an issue.”
To ensure clean linen is never an issue, occupants could take their towels and bedding to the holiday home and remove it with them when they leave.
6. Talk about repairs and maintenance
7. Have an exit strategy
Inevitably there will come a time to sell the property, and the group needs to talk about this well in advance. Life happens — people die, marry, divorce or perhaps hit financial hardship, so everyone will need to be prepared for future hiccups. Even if one of the parties wants to sell while the others want to keep their share, the group will need to decide on how this is managed.
Article provided by: www.realestate.com.au/
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