We look at the past, present and future of co-buying with Theo Michaels of CoBuyWithMe
Theo Michaels, founder of Co-BuyWithMe.co.uk, is in what you might call the second phase of his business, which specialises in bringing together those who want to buy property but aren’t well placed to do it on their own or with family or friends.
Last year Michaels bought a property with two other people. Back then, he says, ‘after looking into a mortgage and seeing how high London property prices were, I knew the only option I had was to co-buy which meant we had a bigger deposit, larger mortgage and split all the costs.
He updates the story for me. ‘We’ve come full cycle,’ he says. ‘Two of us are buying out the third. We started with the co-buying element and now we’re in the position that after two years somebody wants to leave.’
What’s changed in the co-buying scene in the last year? ‘Probably the main development is co-buying is becoming more mainstream as an emerging market. The public is more conscious. The knock-on effect is that now we’re seeing HSBC with a co-buying mortgage. More solicitors are seeing they can work with multiple deed-holders. Developments are also putting forward co-buyer properties. The industry has actually acknowledged that co-buying is a trend and are capitalising on it. Mainstream people are becoming more aware. There was even a storyline on Eastenders. You can always rely on Eastenders to show you what’s trendy.’
Where there’s demand, after all, supply will rush in. ‘There has been enough movement so that the wealth industries will start to market co-buyer services.’
What marks out the types of property that appeal to co-buyers? ‘I think the obvious thing is the number of bedrooms. For most co-buyers, you’ve got three different markets. There’s the first-time buyers who are looking to buy and move in together; for them it is more the lower priced property – enough bedrooms just for them. The next is the private investment market looking for other investors for a syndicate. They’re sticking to the usual terms about what makes a good investment property. It’s the standard formula – if the figures stack up and it can work then that’s what they’re going for. The third group is overseas property. The number of bedrooms is almost irrelevant – they won’t be there at same time anyway. It’s a holiday home.’
This trend may be London-led, he says, but other large cities and bigger towns also figure prominently in the co-buying revolution. ‘Essex, Manchester, Birmingham, the growing towns. In Birmingham, for instance, it is cheaper than London but incomes are relative to that. Where someone in Birmingham is making £14,000 a year, you’ve got the same thing in London at £25,000 a year.’ Michael breaks down the co-buyers into percentages: ‘About 60 per cent are first-time buyers, 25 per cent are private investors, 15 per cent are people looking for overseas property.’
Historically, buying has followed a well-worn path for many generations – but our buying habits have opened up dramatically as our concept of family and community have changed. ‘If you look at the property buying process decades ago, you only ever bought with your spouse. Two things make co-buying inevitable: the social change and the affordability gap. Social values are becoming more liberal, and with affordability still increasing it becomes acceptable to buy with friends.
‘Now we’ve reached the stage of evolution that it is acceptable to go out and find people to buy with. I see the pattern going towards the stage when everyone’s first home will be co-bought – well, not 100 per cent, you’ll always have wealthy individuals and those who prefer to rent. Particularly when you’ve got people who have gone to Uni and lived in shared houses – they may not want to buy alone and live alone. It will almost be the norm to go that route.’
And what’s the next move for Co-BuyWithMe? ‘From our side, we’re very much looking at how to streamline the matching service, to make it more fluid, more targeted, more effective. So they can spend less time looking and more time discussing. We want to provide them with more tools to manage their co-buying experience. We’re going to be investing a lot more in the community side of co-buying.’
Theo Michaels remains the most prolific co-buyer he knows: ‘I co-bought my first property with people I met through mutual friends, then co-bought with three guys last year as an investment; we complete on an overseas property that I bought with six other people, in Bansko, Bulgaria. In that sense, I’m the most prolific that I know of.’
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