The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1219 PROPERTY BREAKUPS... DO THEY COST MORE THAN YOU THINK?
Apr 17, 2024Season 26Episode 1219
Mark Novak, Zanthony Borula and guests
Ever found yourself in a heated debate over splitting the rent with flatmates or navigating the murky waters of a family property purchase? Brace yourself as we tackle the tricky terrain of co-owning and renting with those closest to us. Whether it's the familiar face of a sibling or the daily camaraderie of a friend, mixing property with personal relationships can spell a minefield of hidden risks. We're laying bare the shocking realities behind lease agreements and shared rental responsibilities that could see you grappling with more than just who left the milk out.
Step into the world of property partnerships with us as we dissect the tension-laden process of buying a home without a romantic partner by your side. From the sudden departure of a roommate to the intricacies of bond payments, we're covering all bases—including the ins and outs of the first-time buyer grant that might just be a double-edged sword. Join us for this candid discussion, where we pull no punches in revealing how blood bonds and trust can either cement a wise investment or crumble the foundations of your financial future.
Ever found yourself in a heated debate over splitting the rent with flatmates or navigating the murky waters of a family property purchase? Brace yourself as we tackle the tricky terrain of co-owning and renting with those closest to us. Whether it's the familiar face of a sibling or the daily camaraderie of a friend, mixing property with personal relationships can spell a minefield of hidden risks. We're laying bare the shocking realities behind lease agreements and shared rental responsibilities that could see you grappling with more than just who left the milk out.
Step into the world of property partnerships with us as we dissect the tension-laden process of buying a home without a romantic partner by your side. From the sudden departure of a roommate to the intricacies of bond payments, we're covering all bases—including the ins and outs of the first-time buyer grant that might just be a double-edged sword. Join us for this candid discussion, where we pull no punches in revealing how blood bonds and trust can either cement a wise investment or crumble the foundations of your financial future.
Speaker 1:
Oh, this is a big one. Going into a property with your brother, sister, lover, friend, family buying a property or renting a property together with someone. There are hooks and we're gonna teach you a little bit about it. There's more you should know on the way out, not just on the way. Good morning.
Speaker 2:
How are you? Is that your little property hook?
Speaker 1:
Yeah, that's the hook. You just took the bait, you bought the property with someone, or you rented the property with someone, and you don't realise that there are risks associated. Not saying it's a bad thing to do, though, but you should know about stuff.
Speaker 2:
Yeah. So we had a bit of a chat off air um just before this segment and mark kind of raised some things that I knew nothing about. I mean, I'm struggling to get into the property market myself as a single female and buying a property single white female so disadvantaged I know. But buying a property with my current housemates certainly has crossed my mind, as it has also buying a property with my brother and my sister, who are also in the same situation as me, struggling to get into the property market. Neither of them are in their loving relationships and ready to kind of take that next step with their partner relationships and ready to kind of take that next step with their partner. So to me it makes logical sense. If you're not in that loving relationship, buying with family is the next best thing. You've known them your whole life, you've got that element of trust there and family is blood kind of thing.
Speaker 1:
Of course they'll do right by you and um, hey, xanth, you look a bit.
Speaker 2:
News presenter this morning oh well, thank you, I do try sometimes reporting live um, so let's.
Speaker 1:
Do you want to cover rentals or sales first?
Speaker 2:
let's go rentals okay.
Speaker 1:
so, um, did you know that when you rent with, say, there's three essays, um, you you're one, it's your one essay, two other essays, or renting the one property? Uh, one comes from melbourne, is related to the other man, so he said he doesn't know him too well and you're happily in the property for six months. One of them disappears off back to Queensland. Now you are responsible for the lease entirely, those lease repayments. So much to people's Shock where they think, oh, my god, well, I'm only you know, this isn't my fault, I'm only due for her a third of the rent. The way the Tribunal and real estate and law will look at it Is that you, severally, you are included in that whole bubble. So if or I'll just make it a worst-case scenario both people walk and you're in the property, you're responsible for the whole lease.
Speaker 2:
Yeah, see, I didn't know that either, but it does make logical sense, I suppose. So whoever's name is on the lease, you're responsible for that lump sum of money in the way of rental repayments.
Speaker 1:
Yes. So if you get another two people to replace the two SAs that left, you've also got a commitment there to a bond, because all three of you went into that bond, obviously in equal portions or non-equal portions, who knows. So that's going to be a tip. Don't forget about the hook of attending to the bonds to get those people's money back to them and to get the bonds out of the new people in. It's often a mess, probably meant to tidying up years down the track, because the tenant never mentioned anything and they should have.
Speaker 2:
Yes, absolutely, and don't rent with esches as well. I suppose is another key takeaway from that, hey esches are good.
Speaker 2:
Dy esches are the best so we've covered and we have, we covered the lease, the lease side of things, the rental side of things is really done and then moving into the buying side of things. Yes, yeah, I have seen couples come through properties and have um complete arguments in front of me in the way of buying a property and it's literally like witnessing the end of someone's relationship live in front of you. It's not a fun situation to be in. Property buying Shouldn't be that stressful. So if you don't want to go through that stress of buying with your partner, let's talk about potentially buying with family or friends.
Speaker 1:
Yep, now one hook, one of the biggest hooks that I've got to mention is first-time buyer grant hook. The government does leave on the table for you no stamp duty if you're under $800,000. Yep, now, that's a saving of 30k. Um. Now, as soon as you buy with another person family, member, friend or whatever you cannot double dip um. So it's a little bit sad that someone's effectively only going to get half of the benefit or no benefit, and one person will get the full benefit if it's two people yeah so I don't know if you're following me on this one, but I often see people like a, two people on the go.
Speaker 1:
Do you realize that if you just buy something lower value, so you're trying to buy something for eight hundred thousand paint, get, you know, if you both buy something for? So you're trying to buy something for 800 000 paint, you know, if you both buy something for 550, you're both going to pay no stamps. You may be able to both afford it and they're like okay, so that's hook number one for purchasing. Watch out, make sure you can uh, you can get your entire first time by a grant, because you're only going to get one by the cherry. Once you bought with someone, it's over. Uh, what's the next? What's the next one?
Speaker 2:
the next little hook. Well, I suppose you've purchased something and now you want to buy something else, or you want to get out of that property and um move in with your husband down the line, something like that. So we've purchased our property with our brother, that's's great. What comes next? Fast forward 15 years down the track. We've got better income, we're in a really strong position to buy our next property. We're upsizing. How do we get out of this current situation? I might be in love, yeah.
Speaker 1:
In love. So where that works, I'll give you a perfect example. Brother, sister buy a property together, goes, works, a treat, and brother falls in love with a gal and they're both on pretty good incomes. They want to buy something together. So there's a force. Then it forces the other partner to actually go oh shit, okay, am I selling, am I keeping? They agree to keep it.
Speaker 1:
Now this is the biggest kicker that people don't know. Brother and sister buy a unit for $500,000. Sister brother falls in love and wants to buy a property with his girl Pretty financial, got a bit of equity in the unit that he purchased, got a pretty good income. His girlfriend's got a pretty good income. They want to buy for $500. When brother goes to the bank, he'll go to the bank and say I've got half a unit over here that I bought seven years ago and I'm just about to buy with my girlfriend. So I would have thought and most people do think this most people think I've got a $250 debt over there what I bought with my sister and I'm going to have a $250 bought with my sister and I'm gonna have a 250 debt with my new girlfriend in buying the property.
Speaker 2:
No, yeah, that's really surprising to me, because to me, it it just makes sense. You've only borrowed five hundred thousand dollars with your brother. You put in five, he's put in five, you paid off 250 of it, so really, so why why not? Though, why is it that the banks don't look at it like that when it comes to buying the next property, given that you do? Have equity property you have put in money, somebody else is always paying back those repayments as well.
Speaker 1:
Okay. So the way the banker assesses it is much like a lease. They will hold you responsible for the entire amount, even though in your mind, on paper, you own half of the amount. So what I find often happens is you know, the brother and sister that bought together went really, really well.
Speaker 1:
Sisters or brothers, you know, falling in love. They've gone to buy a house and they said I'm going to keep that unit, don't worry, I'm not going to put you under pressure, but we're going to buy something together. When they roll up to the bank, the bank says you bought something for $500, and they go yeah, but I only owe $250, and you want to buy something for 500, and they go yeah, but it's I'm only, it's me and my partner, so it's only 250. They don't assess you on for 500, grand 250, 250. They assess you on a million dollars. So you go no, no, no, no, but my income doesn't have to cover a million dollars. The bank assesses you think you have to have cover that million dollars. So then what happens is rather a sell I want to get out of my half. Sister is now forced to buy out that first half and she's like mate, this isn't my problem that you guys want to buy a house or another unit or they're up. Then stamp duty is triggered.
Speaker 2:
Because it's over, because it's a million dollars, you're now looking to buy your next property. You now need to pay stamp duty.
Speaker 1:
When you buy out your half of your initial, your brother or sister in the beginning or the person you're with that half will have to pay. You will have to pay a duty on it. So it's like why am I having to pay stamp duty on to buy out my half because they're off getting married? So it's quite interesting. But this is, I do have to say, it's all a good problem here. It's all a money-making problem, as in you're making money so, but they're just hooks that people don't actually consider, or their financial things that people don't know.
Speaker 2:
Yeah, to me it's a smart idea to go and buy a property with with a really close friend, or with your family, with your brother, with your sister, something like that. But it's just these things that aren't spoken about, nobody knows about, and you don't really you're not made aware of them until it's too late or until the 11th hour, kind of thing, when it is time to think about next steps yeah, well said it.
Speaker 1:
Um, when you go into it, you don't think of the exit, you just more just think about, about you know getting in, getting property, owning half. But as long as you know this and it's in your mind and people know today, they can explain it. It's in your mind and people know today and they can explain it to their friends and family and they know it on the way in, on the way out, when that person wants to get out of their half, it's like, yeah, I know how this works, uh, and there's no, there's no surprises like yeah, yeah, well, there are certainly no nasty surprises with me now, and just the breakups, the makeups, the shake-ups when it comes to buying a property with a friend, with family, anything like that.
Speaker 2:
So as long as you're armed with all of the information, you're in a really strong position to make whatever decision moving forward it's real sant.
Speaker 1:
Have a lovely day. Hopefully you've helped some peeps out there.