Gen Z & Millennials Embrace Buying Their First Home With a Friend

Young homeowners are getting creative in the face of spiralling house prices, and now Gen Z and Millennials are starting to get comfortable buying their first home with a friend or sibling.

According to a recent survey by Lloyds Bank, a staggering 46% of first-time buyers have considered pooling their resources with a friend or sibling to get a foot on the constantly shifting property ladder.

The average house price in the UK is closing in on £300,000, while the average salary for people aged 22-29 is £36,028. In addition to the obvious hurdle of affordability, banks have toughened their lending criteria since the 2008 crash. First-time buyers now need a 10% deposit and to pass a series of affordability checks before they qualify for a mortgage.

Home ownership has become a distant dream for many Millennials and Gen Z workers, especially in London, where Rightmove reckons the average property price is £680,000. Even with London salary weighting, this is simply too much, and it’s no surprise that the average age of a first-time buyer has risen from 29 to 34 since 2011.

Joint Mortgage With a Friend

Young buyers are thinking outside the box and joining forces to buy properties rather than paying separate rents. The vehicle to achieve this was always in place, but until recently, joint mortgages were generally reserved for working couples pooling their finances to build a future together.

Buying with a friend is a modern concept that would have seemed alien just a generation ago. Many Millennials and members of Gen Z simply don’t have the same goals of marriage and children, though. In 1991, 47% of men and 56% of women aged 20-39 were married. By 2021, these figures had decreased to 25% for men and 31% for women, and an ever-increasing number of Brits are choosing to stay child-free.

Economic factors like high inflation and a cost-of-living crisis make saving up for a home even more difficult. Recent research by SpareRoom revealed that 34% of UK renters spend more than 50% of their take-home pay on rent alone. As housing prices continue to rise out of all proportion to stagnating wages, as a simple valuation on your own home will show you, home ownership will only get further out of reach for young Britons.

Home Ownership Drives Wealth

That is the great paradox because home ownership is historically one of the greatest wealth drivers. Between 1997 and 2016, average house prices in England and Wales increased by 259%, while earnings rose by 68%. So, owning a property is a path to wealth accumulation, but it is simply closed off to most single-income young Britons. This new version of shared ownership is a way to beat the system, and it’s increasingly popular and organised.

Property portal Share to Buy connects buyers and properties in a community hub, and CrowdToLive offers rent-to-buy and shared ownership models.

What Could Go Wrong?

Of course, buying a house with a friend or sibling comes with its own set of risks and challenges. It’s a lot of faith to put in a friend, and romantic relationships, job loss, illness and several other factors can put a huge strain on the arrangement. A joint mortgage is a huge commitment; if one party defaults, the other will either have to cover that cost or face the consequences.

The general consensus is that anybody considering this kind of joint purchase should draft a legal agreement that formalizes the ownership structure, ownership percentages, and clauses that specifically address issues like one party wanting to sell or wishing to move in with a romantic partner. If selling becomes part of the plan, UPSTIX can help both parties move forward quickly and fairly by offering a fast property valuation and a streamlined selling process—eliminating the usual delays of the open market.

There are a number of specific risks that go with buying a house with a friend, but for many Millennials and members of Gen Z, the potential rewards more than outweigh them. Bold times call for bold solutions, and this is one solution to the spiraling cost of housing that is keeping Millennials and Gen Z off the property ladder.