Pooling resources with friends or family could be the ticket to that second home, says Deany Judd
“It’s an odd thing to say, but it’s made us feel quite different about the future-we have a sense of purpose now that we hadn’t even realised we were lacking.” says Kim Peatfield, a 39 year-old PR executive who, along with her TV executive husband Tristan, has bought a holiday home in La Rochelle in the Vendee region of France. Nothing unusual in that. What is more unusual about their purchase is that in order to fulfil their long-held dream of owning a house in France, they pulled their resources with Tristan’s step-brother Simon and his partner Amanda and bought the property between them.
The Peatfields have holidayed in France for several years and on their return every summer have discussed and explored the possibility of owning their own place. However, there has always been a shortfall between what they wanted to buy and what they could afford to spend. “We happened to mention to Simon and Mandy that we were going to France with the purpose of looking at properties and they said they’d be interested in buying with us. We were thrilled because it immediately doubled the amount we had to spend and therefore the standard of property available to us”
After just two days of driving around the Vendee region they decided to buy a beautiful 150 year-old farmhouse in need of some renovation but which was structurally sound. It cost 120 000 Euros and so far the renovation has been minimal but all costs have been two ways , including the cost of the French lawyer’s fees. That was last November and since then the Peatfields and their two children, Oliver,8 and Isabella, 3 have spent an idyllic Festive break as well as the February mid-term break at their new property whilst Amanda and Simon, due to time restraints haven’t yet even visited it.
And that’s of course where such an arrangement comes into its own. With many people restricted to two perhaps three holidays a year, it makes a lot of financial sense to buy a property together and divide the running costs.
Fanny Blake, author of A Place in the Sun, thinks that whilst sharing the purchase of a property with either friends or family is a great way of gaining a foothold on the second home property ladder, it’s imperative that it’s thought through properly. “If you are buying for example in Spain or France many of the inheritance laws are very different from here and so that makes things complicated. It may be advisable to set up a company in this country and then buy the property through that.” explains Fanny, but she’s more concerned that what may appear at the outset as a trivial matter may in time become a bigger issue, “Can friends come and stay? Where can both parties store things? What about food left in the fridge? How is the property going to be decorated? These are the things people fall out about. I think in theory it’s a great idea but the smallest details need to be thought through and addressed, a kind of pre-nuptial agreement that covers every kind of possible outcome is vital.” she warns.
The Peatfields recognise that there could well have been areas of conflict with their arrangement, but believe that as long as there is a basic trust in place everything should run smoothly. “There has been no problem with the division of time spent at the farmhouse to date and we don’t really expect there to be because we all lead such busy lives. The décor of the house has been the one area where we’ve all had to compromise; Simon and Amanda have more of a minimalist taste and we are more flamboyant, but we’ve reached a solution in which everyone’s happy.” Kim is adamant however that she wouldn’t have considered such an arrangement with anyone other than family, “There has to be absolute honesty between the parties and I’m not sure that exists with friends to the same extent that it does with family.” says Kim.
Clothing agency owner Jack Devji , has had no such qualms about buying a property with friends rather than family. The 44 year-old owns a beautiful house in trendy tropical island Koh Samui off the coast of Thailand with friends Warren Bradshaw and Chirag Patel. “Warren has been the driving force behind it all. We go to Thailand a lot together and he’s always pushed for us to buy our own place there. Although I loved the place I never really saw the benefit of owning somewhere out there, but basically he’s just worn me down and last May Warren put some figures together and it all made sense. He then persuaded Chirag to come in on it too which made it even more affordable.” says Jack.
They paid £64000 for their home and have spent a further £6000 putting in a pool and decorating it. “We have this beautiful home which cost us £25000 each. It costs about £1000 a year to maintain and we split that too. Everything is set out legally and we all spent Christmas there together.” Like the Peatfields, the décor could have been a stumbling block but none of them has allowed it to be; they simply left it to one person and they’ve all added bits and pieces when they’ve been out.
For Jack the beauty of it is twofold: “I’m glad Warren talked me into it. It feels different having your own place abroad and it’s been a good investment too. Property prices in that area have risen by 20% since we bought and I’m not sure we’d have seen the same return for our money in London. Our plan is to hang onto it for a while, enjoy it and then buy some more property out there. We couldn’t possibly have got property in Europe or America for the same price, nor would we have wanted to.”
The pitfalls of ownership of a property with friends and family may be too great for some people but that doesn’t necessarily preclude them from the benefits of joint ownership. Former airline captain Steve Last set up the Ownergroups company in 1980 when he started co-sharing holiday property in Europe and the US with BA crew colleagues and others. It appeals not only to those wishing to buy a share in a property but to those who have already bought a property abroad, but find that their pattern of use is changing and that they no longer want the responsibility of full-time ownership, yet are reluctant to sell up.
The Ownergroups Company brings like-minded people together and they draw up a group plan in which the property becomes the principal asset. All participants then have an equal equity share with the same rights, and an equal amount of occupation time. They agree on a suitable working arrangement in a shareholder’s agreement, which is tailor-made by the company to suit the group members for each particular property, according to local laws and the high/low seasons of the location.
Thereafter groups have the option to manage their own affairs, such as settling accounts, insurance, local taxes and utility bills, while organising property maintenance, improvements or additional enjoyment purchases such as a car or a boat. Alternatively they can contract these management tasks to The Ownergroups Company. The obvious advantage of sharing costs in this way is that it allows purchasers to use a far more luxurious property than they would have been able to afford if they had bought alone.
“Co-ownership at all levels is normal amongst people owning boats and planes. Like interests attract like,” says Last. “Potential areas of friction such as organising usage – where two people might want the same week or month are covered in the shareholders’ agreement, where we have a unique allocation process that in my 20 years’ experience has always provided a satisfactory solution.”
Potential and current group shares on offer at present through Ownergroups Company vary from an eighth share in an alpine chalet with four bedrooms at £25 000; a fifth share in a fishing lodge in Galway in Ireland for £75 000; and a quarter share in a quite magnificent 4 bedroom villa in Sandy Lane in Barbados, complete with two staff and a car for £570 000, amongst others.
Although it is not uncommon for people to get into groups with friends and relatives, who will feel that a very formal set-up is unnecessary as they all know one another, Last would strongly advocate treating the initial set up as if it were done between strangers. “Any purchase of this kind must be viewed as a long-term investment, and people's circumstances can and will change. With the best will in the world, one cannot avoid such things as illnesses, financial and family changes, which can lead to changes in the membership of a group, or the need by some members to make such changes. This inevitably means that either the group has to accommodate people who were not party to the original set-up, or to the group itself disintegrating, often with a degree of acrimony. If it is set up to take account of this from the beginning then such problems can be avoided.” He explains.
But acrimony is the last thing on Kim Peatfield’s mind as she sets off for a two-week break in their newly acquired property, “The euphoria of a holiday is short-lived but when you own your own place you talk endlessly of your plans for the place and just feel differently about holidays. I haven’t got over the excitement of owning such a great place.”