Buying a Home With Friends or Family
🏡 Pooling resources to get onto the ladder
With prices high and deposits hard to save, buying a home with friends, siblings, parents or a wider group is one of the few ways many New Zealanders can get onto the property ladder. Pooling deposits and incomes can turn a home that is out of reach for one person into a realistic purchase for two or three. It can work brilliantly, but co-ownership also ties your finances tightly to other people, and the arrangements that feel obvious while everyone is excited can become painful if circumstances change. The two decisions that matter most are how you hold the title, either as joint tenants or as tenants in common, and whether you put a written co-ownership agreement in place before you settle. On top of that sits the reality of a shared mortgage, where every borrower is liable for the whole loan, and the risk that a co-owner's future partner could gain a claim over the home. This guide walks you through the ownership choices, the agreement you need, the mortgage trap, gifting versus lending a deposit, and four worked New Zealand examples so you can go in with your eyes open.
Two ways to hold the title
When two or more people are on a property title in New Zealand, they hold it in one of two ways. The choice is recorded on the title itself and has real consequences, especially when someone dies or wants out.
| Feature | Joint tenants | Tenants in common |
|---|---|---|
| Shares | You own the whole property together, with no separate shares | You each own a defined share, equal (50/50) or unequal (for example 70/30) |
| When an owner dies | Right of survivorship: the share passes automatically to the surviving owners | The share passes under that owner's will to whoever they leave it to |
| Best suited to | Couples who want the survivor to take full ownership | Friends, siblings or a group who put in different amounts and want their share protected |
Under a joint tenancy, no owner has a share they can leave in their will. When one owner dies, the survivors simply own the whole property between them. This is ideal for a married or de facto couple who want each other to inherit automatically. It is usually the wrong fit for friends or an investment group, because a deceased owner's family would receive nothing from the home even if that was not what anyone intended.
Why the default matters
Under the Land Transfer Act 2017, two or more people are registered as joint tenants by default unless the transfer says otherwise. That means if you buy with friends or family and nobody raises it, you may end up as joint tenants without realising, with the survivorship outcome that follows. If you want to protect each person's stake and let it pass to their own family, you must ask your lawyer to record you as tenants in common, and set out the shares.
Most friends and family groups who buy together should be tenants in common, so each person's share is theirs to protect and pass on. A joint tenancy can be severed later and converted to a tenancy in common under section 48 of the Land Transfer Act 2017, and one owner can usually do this without the others' agreement, but it is far better to get the structure right from the start. Tell your lawyer clearly how you want to hold the title before settlement.
📝 The co-ownership agreement and the shared mortgage
The single most useful thing you can do when buying with other people is to sign a written co-ownership agreement, sometimes called a property-sharing agreement. It is a private contract between the owners that sits alongside the title and the mortgage. While everyone is on good terms it feels unnecessary. When someone loses a job, moves overseas, forms a new relationship or simply wants their money back, it is the document that keeps the peace and protects your investment.
What a co-ownership agreement should cover
- Contributions: who paid what share of the deposit, and the ownership shares that reflect it
- Ongoing costs: how you split the mortgage, rates, insurance, body corporate levies and repairs
- Repairs and improvements: how you decide on and pay for maintenance and upgrades
- Occupation: who lives there, whether rent is paid, and what happens if one owner does not live in the home
- Exit: what happens if someone wants out, how their share is valued, and the notice they must give
- First right of refusal: a departing owner must offer their share to the other owners before selling to an outsider
- Default: what happens if an owner cannot pay their share of the mortgage or rates
- Dispute resolution: a clear path, such as mediation, before anyone heads to court
- Death and relationships: what happens if an owner dies, or forms a relationship that could create a claim
The most common flashpoint is what a departing owner's share is worth. Agree the method now, not later. A typical clause says the share is valued by a registered valuer the owners jointly appoint, with the departing owner's share calculated from the current market value less the mortgage. Writing the method down means nobody argues about the number when emotions are running high.
The mortgage reality: joint and several liability
When a group borrows together, the bank does not split the loan into separate slices. Every borrower signs up to the whole loan under what is called joint and several liability. This is the part people most often misunderstand, and it is the biggest financial risk of co-owning.
| What people assume | What actually happens |
|---|---|
| "I only owe my half of the loan" | Each borrower is legally liable for the entire loan, not just their share |
| "If my co-owner stops paying, that is their problem" | The bank can pursue any borrower for the full arrears and the whole balance |
| "A missed payment only hurts the person who missed it" | Missed payments on a shared loan can damage every borrower's credit record |
| "My share of the loan drops when I move out" | You stay fully liable until the loan is repaid or refinanced to remove you |
If a co-owner loses their income and cannot pay, the others must cover the full mortgage or risk the bank taking action against the property and against each of them personally. A missed or defaulted payment can also land on every borrower's credit file, making it harder for all of you to borrow in future. Your co-ownership agreement should say who covers a shortfall, how they are repaid, and what happens if the gap continues. It cannot change your liability to the bank, but it can set the rules between you.
Borrowing power cuts both ways
Being on a shared mortgage affects your own future borrowing. Because you are liable for the whole loan, another lender will usually count the full shared mortgage as your debt when you later apply for finance of your own, even though you only own a share of the home. That can reduce how much you can borrow for your next move. Factor this in before you commit, and revisit it whenever your plans change.
💵 Family deposits, exits and relationship risk
Money often flows into these purchases from parents or wider family, and owners' lives change over the years they hold the home. Two areas need care from the start: whether family help is a gift or a loan, and what happens when a co-owner exits or forms a relationship.
Gifting versus lending a family deposit
When a parent helps with a deposit, the money is either a gift or a loan, and the difference matters a great deal. Whichever it is, document it clearly before settlement.
A gift is money given with no expectation of repayment. Banks usually require a signed gifting certificate or statement confirming it is a genuine gift, that repayment is not expected, and that the parent has no claim over the property. Once a gift goes into the family home it usually becomes part of the owner's relationship property, so it can be shared with a future partner if the relationship later qualifies under the Property (Relationships) Act 1976.
A loan is money that must be repaid. It should be recorded in a written loan agreement setting out the amount, any interest, and when it is repayable. A documented loan is a debt that must be repaid out of the sale proceeds before any equity is divided, which can protect the family money in a relationship split. The trade-off is that the bank counts the loan as debt when assessing how much you can borrow, and an unsecured family loan ranks behind the bank's mortgage.
The worst outcome is undocumented family money, where nobody can later prove whether it was a gift or a loan. That uncertainty causes disputes between the family and the co-owners, and confusion if a relationship ends or someone dies. A short deed of gift or a written loan agreement, prepared by a lawyer, removes the doubt. Get advice before the money changes hands, not after.
Exit and sale
People move overseas, buy their own place, or simply want their capital back. A good co-ownership agreement makes an exit orderly: the departing owner gives notice, their share is valued by the agreed method, and the other owners get a first right of refusal to buy it. If the remaining owners buy the share, they usually need to refinance the mortgage into their own names so the departing owner is released from the loan. If nobody can buy and there is no workable clause, a co-owner can apply to the court under section 339 of the Property Law Act 2007, which lets a judge order a sale, a division of the property, or a buy-out by one owner. That is slow and costly, which is exactly why the agreement matters.
The relationship-property risk
This is the risk co-owners most often overlook. If one of the owners has a partner, or gets one, that partner can gain a claim over the owner's share. Under the Property (Relationships) Act 1976, once a de facto relationship has lasted three years, relationship property is generally shared equally if the couple separates, and the family home is almost always relationship property even if it was bought before the relationship began. Marriage or a civil union brings this in too.
If a co-owner moves a partner into the home and the relationship reaches the three-year threshold, the partner may be able to claim a share of that co-owner's stake. Meeting that claim can force the co-owner to sell their share, which drags the other owners into a sale or buy-out they did not choose. The usual protection is a contracting-out agreement (often called a "section 21" or pre-nup style agreement) signed by the co-owner and their partner, plus a co-ownership agreement that anticipates the situation. Everyone should take their own legal advice.
🔢 Four worked New Zealand examples
These examples use illustrative prices and simple round numbers to show how the rules play out. Your own figures will differ, so treat them as a method rather than a quote, and take your own legal advice.
Situation: Aroha and Mia buy a $760,000 townhouse together. Aroha contributes a $120,000 deposit and Mia contributes $40,000, so the combined deposit is $160,000 and the loan is $600,000. They agree to split the mortgage repayments equally and hold the title as tenants in common, with shares that reflect what each of them puts in.
Working out the ownership shares:
Situation: Brothers Tama and Rewi buy a $800,000 home together, contributing equally. Tama has a will leaving everything he owns to his daughter. Some years later Tama dies. What happens to the home depends entirely on how they held the title.
If they were joint tenants:
If they were tenants in common (50/50):
The two outcomes could not be more different, and both are perfectly legal. If Tama wanted his daughter to inherit his stake, joint tenancy was the wrong choice. Friends and family buying together usually want tenants in common precisely so each person's share passes to their own family. Review the title and your will together, and update both if your wishes change.
Situation: Sam, Priya and Jack bought a home together as tenants in common in equal thirds. It is now worth $900,000 with a $450,000 mortgage, so the equity is $450,000. Sam is moving overseas and wants to sell his share. Their co-ownership agreement gives the others a first right of refusal at a valuer-assessed price.
Valuing Sam's third:
After the buy-out:
Buying Sam's share is only half the job. Until the mortgage is refinanced into Priya and Jack's names, Sam stays jointly and severally liable to the bank even though he no longer owns any of the home. If the others could not afford to buy him out, and there were no workable exit clause, Sam could apply to the court under section 339 of the Property Law Act 2007 to force a sale. A clear agreement avoids that slow and costly path.
Situation: A parent puts $100,000 toward their daughter's first home. The daughter adds $20,000 of her own savings and borrows $480,000 to buy a $600,000 home. A few years later she has been in a de facto relationship for over three years, and the couple separate. Assume the equity at separation is $150,000. The result depends on whether the $100,000 was gifted or lent.
If it was an undocumented gift into the family home:
If it was a properly documented loan:
The only difference between these outcomes is a written loan agreement signed before the money changed hands. Documenting the help as a loan, ideally with legal advice on securing it, keeps the parent's contribution out of the relationship-property split. The figures here are illustrative and the law is nuanced, so a contracting-out agreement and advice from your own lawyer are the safe way to lock this in.
Related tools and guides
- Mortgage calculator
- First home buyer calculator
- Borrowing capacity calculator
- First home buyer guide
- Going guarantor on a loan guide
- Estate planning basics guide
- Splitting property on separation guide
- The three-year rule for de facto couples guide
Verified July 2026 against: Settled.govt.nz, understanding the types of ownership; the Land Transfer Act 2017 (section 47 joint tenancy default and section 48 severance) on New Zealand Legislation; the Property Law Act 2007 (section 339, court orders for division or sale of co-owned land); the Property (Relationships) Act 1976 (equal sharing, the family home, and the three-year de facto threshold); and Community Law guidance on co-ownership and dividing relationship property. Prices, deposits and equity figures are illustrative. This guide is general information, not legal advice.
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