Average UK house prices are continuing to march upwards – rising more than £80 a day last month, according to Nationwide. With affordability an ever-increasing challenge, it is no wonder growing numbers of individuals are joining forces with someone else to get on to the property ladder.

A recent survey of 2,000 adults aged 18 to 45 who did not own a home found 40% believed they would never be able to buy a property by themselves.

Buying a property jointly with someone else has several advantages over going it alone: you can pool your savings in order to put down a bigger deposit; potentially borrow more for your mortgage by combining your incomes; split the various home-buying costs such as stamp duty and legal fees, too; and divide up household bills once you have moved in.

But it is crucial to understand the various financial and legal aspects involved. How best to own the property will depend on whether you are married or cohabiting, or if you are buying with a friend or family member. (Note that the below advice mainly covers England and Wales, as the law is different in Scotland.)

“The main potential challenges are if one person wants to sell up or move out before the other,” says Lisa Parker at the broker L&C Mortgages. “It’s therefore vital to discuss what you will do if this happens before you make the purchase, so you know where you’ll both stand.”

Joint tenants v tenants in common

When two (or more) people buy a property together, they have the option to buy as “joint tenants” or “tenants in common”. Joint tenants means both parties have equal ownership of the property. If one person dies, their 50% share automatically goes to the other owner – you can’t leave your share to someone else in your will.

With tenants in common, each party owns a specific share of the property. And you can leave your share to whoever you want in your will. This should all be recorded in a legal document – called a deed of trust or declaration of trust – drawn up by a solicitor.

Buying with a spouse

Mark Harris, the chief executive of the mortgage broker SPF Private Clients, says joint tenants is the arrangement married couples usually opt for: becoming co-owners of the property, with neither person having a specific share.

“If the property is sold, the parties are entitled to an equal share of the proceeds, regardless of how much they contributed to the deposit or mortgage,” he adds.

That does not necessarily mean you will get half each if you divorce. Although the starting point for divorce finances is a 50/50 split, courts tend to prioritise fairness over strict equality and consider factors such as each partner’s needs and contributions to the marriage, where any children will live and future earning potential.

Buying with an unmarried partner

Unmarried partners can buy a home as either joint tenants or tenants in common. Buying as the latter allows each person to own a specific share that may, for example, reflect how much they contributed to the deposit or pay towards the mortgage. This can change over time – for example, if one person pays a lump sum off the mortgage.

It is important to understand that the mortgage will still be joint, with each party potentially liable for the whole amount.

Unmarried couples should hire a solicitor to draw up a deed of trust detailing the share of the property each owns and how the proceeds should be divided up if it is sold.

Another legal document to consider getting is a cohabitation agreement. This sets out the arrangements for things such as finances, property and children while you are living together and if you split up, become ill or die. They typically cost between £350 to £500.

Mark Jenkins, the general counsel at Purplebricks Mortgages, says a cohabitation agreement “typically covers things like paying for the property or a mortgage, whose names are on the mortgage, how the property is to be held legally between you, what happens if someone can’t keep up with the mortgage, the expenses of running and maintaining the property, rights to fixtures and fittings, and rights to sell the property or buy out the others.

“Because it’s a contract, it’s really flexible and you can document what you need, which can also help set expectations, so all parties know where they stand.”

One bit of potential good news is that the government has confirmed that it will consult on “strengthening rights and protections” for unmarried cohabiting couples later this year.

Buying with a friend or a sibling

“Buying with a friend is becoming an increasingly popular option for first-time buyers,” says the developer Fairview New Homes, which published the survey of 2,000 adults referred to earlier.

Most co-buying friends, siblings or property investors buy as tenants in common, each owning a specific share of the property.

It sounds obvious, but it is important to be able to trust any friend or relative you buy a home with. You will need a joint mortgage and you will both be “jointly and severally liable” for the debt – meaning the mortgage lender can pursue anyone named on the mortgage for the entire repayment.

Even if the mortgage is always paid on time, the other person’s financial behaviour can affect your credit record.

John Webb, a consumer expert at the credit reference agency Experian, says: “If you apply for a joint mortgage with someone, it will create a link between your credit reports – called ‘financial association’. If you apply for credit in future, the company could check the other person’s credit history. If they have any negative information, this could affect the decision.

“It could also mean you pay more in interest or get lower limits. It’s also worth keeping in mind that you’ll both be financially responsible for the account, so any missed payments will impact both your credit scores.”

Buying with a friend or your brother or sister is rarely intended to be a lifelong arrangement. As with unmarried couples, a deed of trust and/or cohabitation agreement should set out the financial contributions and responsibilities of each person.

It should include what will happen in the event of one person wanting their partner to move in, or if they want to move out and let their room, for example. The agreement should also clarify what will happen if one person wants to sell up and move on but the other doesn’t.

Buying with your parent(s)

Technically, you can buy a property with one or both of your parents and own it as joint tenants or tenants in common. But a more typical option is a “joint borrower sole proprietor” (JBSP) mortgage.

With this setup, your parent(s) will share responsibility for the mortgage repayments, but they won’t be named on the title deeds.

This type of mortgage can help struggling first-time buyers get on to the property ladder, as their parents’ income will also be taken into consideration when calculating mortgage affordability. Later on, you may be able switch to a new mortgage in your name only, if you can afford it.

JBSP mortgages are proving increasingly popular, says Harris. Most banks and building societies offering this type of mortgage do not have separate product ranges as such, though there are some exceptions such as the Principality building society.

Harris says: “While not available from every lender, the JBSP mortgage is definitely growing in availability. Suffolk building society recently launched one, but it is difficult to say which is the best because there are many variables to consider. For example, Gen H allows the most parties to join the mortgage [up to six, including the owners], while Metro Bank is very flexible in terms of who they will allow to support the homebuyer, and Hinckley & Rugby building society can be flexible for older supporting applicants by splitting the mortgage with differing terms.”

There are also the likes of Barclays, Accord Mortgages, Skipton building society and Bank of Ireland that are worth a look, as well as a whole host of building societies and specialists such as Vida Homeloans and Foundation Home Loans, Harris adds.

In terms of parental help, gifted deposits are also becoming more common. This is a cash gift – not a loan – from mum and dad or another relative that a homebuyer uses to finance some or all of a mortgage deposit.

Best advice from two friends who bought together?
‘Be completely transparent’

Jack, 27, and Gemma, 28, had been renting together, and joined forces to get on to the property ladder.

The two friends say they knew they wanted to get out of renting after their landlord kept pushing up the rent. “We’ve rented together for five years and decided it was the right move for both of us. Realising that we couldn’t buy in London on a single salary, we decided to buy together,” they say.

Last year, the two tech consultants bought a two-bedroom property for £440,000 with a deposit of £44,000, which they split evenly. It is at Fairview New Homes’s Dock28 development in Woolwich, south-east London.

Gemma and Jack were “really surprised” by how easy the buying process was as friends: “The only challenges came from solicitors, but these were more to do with the general challenges of buying a house … rather than the process of doing it with a friend.”

The pair say they would “absolutely recommend” buying as friends. “We realise that for some it can be off-putting as there’s a societal expectation that when you buy a house, it has to be done with a significant other, but we decided to do it together as it made sense for us at the time.”

Their advice for anyone considering buying with a friend is to be upfront.

“Be completely transparent, have conversations together and plan how things will work. There need to be open lines of communication, and you’ll have difficult conversations – whether that’s about what you want out of a property or area, or seeing each other’s finances in a degree of detail that you probably haven’t before.

“It’s important to be open and honest. Without this, there will be surprises that can lead to even more awkward conversations, or even losing your dream home.”

The two saved up for several years and used government schemes to boost their savings. Jack paid into a help-to-buy Isa, while Gemma put money into a lifetime Isa.