One of the big issues facing people in my age bracket (and younger) is the ever increasing cost of owning your own home. And in places like Sydney, even covering the rent can be a hard task, let alone saving more for a deposit on a house.
Tonight I jotted down the outline of an idea of a different approach to owning your own place.
While I was at Woodford over Christmas I went to a seminar on “intentional communities” and co-housing. These concepts interest me, not only because of my want and need for stronger community in my life, but also because of the seeming impossibility of buying my own place, particularly in my chosen city of Sydney.
I have been discussing this with a few friends, including one or two that are lookig to buy in the next 12 months. One of the thoughts I have had is that perhaps we could join together and buy a unit together, sharing the burden of the initial deposit and the monthly cost of the loan repayments.
It would be fairly trivial to work out a way to proportion equity in the house basis the payments made by each individual, and the amount up front put into the initial purchase cost. This way if either of the people involved were to decide to move out or sell up, there’d be some way to work out a suitable “pay out” for the individual.
Of course there are complexities and potential issues, and those involved would have to be pretty committed to sticking it out for I would say a minimum of five years, but I don’t think it is quixotic to think that it would be possible to work something out.
What this would be is something similar to renting with friends, with slightly higher stakes and commitment, and where the money spent on “rent”, rather than going to an investor, would actually be building equity in property that could be used later towards a place of one’s own, not to mention the inevitable capital increase in the property itself.
Thinking through this further it wouldn’t be a massive stretch to see some norms emerge that could be codified in much the same way as rental and bond agreements. These agreements could include listings of rights and responsibilities, as well as codified methods of dispute resolution. They could even be administered in much the same way as current tenancy agreements are managed by an authority such as the Dept. of Fair Trading (in NSW) and similar bodies country wide.
This would help a lot of young Australians get a leg up in the property market, and get them closer to the dream of having a place to call your own.
Thoughts and comments especially welcome on this post – what do you think? Could it work? What issues would arise? Am I dreaming?