Want to go halves on a house? Business' solution for first-home buyers

Four of the five founders of homies.co.nz Dominic Lauese (left), Matt Naylor, Tim Houng-Lee and Elliot Harrop. Photo / Jason Oxenham

A new business thinks it has found a way to get more first-home buyers into the property market - having them going halves on a house.

Homies.co.nz has just gone live and seeks to pair up would-be property owners with others in similar situations so they can buy their first home together.

The business is the brainchild of five Auckland friends who wanted to find a solution for Kiwis who have been priced out of the property market.

One of its founders, Dominic Lauese, said the ultimate goal was for both parties to eventually own their own home.

This way, each "homie" would be able to build equity, show evidence of regular mortgage repayments, and take advantage of any capital gains. Most importantly, they would have the security of owning their own home, he said.

"From here you can build equity and continue saving towards eventually purchasing a home on your own.

"At the current rate of house price increases, within a two-year timeframe you could possibly provide ... significant capital gains and be in a position to use these as equity or sell the property."

The method of home buying allows the pair to pool their funds for a deposit. For example, for an $800,000 house each partner would have to pay an $80,000 deposit instead of $160,000.

Mortgage repayments on a loan of that size would equate to $387 per week each (based on an interest rate of 4.79 per cent per annum over 30 years).

But what if one party wants to sell and the other doesn't? What if a homie fails to meet mortgage repayments?

Lauese said Homies sets up meetings with prospective home buyers so they can get to know one another before they team up.

It has also engaged the services of a legal firm and home loan and insurance consultants to prepare for such eventualities.

However, the partners would have to live with one another for about 12 months in order to use their KiwiSaver funds so it'd certainly pay to ensure all parties have compatible goals.

"Any time you go into a financial arrangement there's a risk, but a lot of the risks involved are risks that are faced by the everyday home owner," Lauese said.

Homies makes it money by charging $200 for an individual or $250 for a couple to attend one of its meetings.

Commenting on Homies' model, personal finance expert Mary Holm said buying a home with strangers was risky and that purchasers should always get independent legal advice.

"Spend a fair bit of time with the other people you're considering buying with. Get to know them. Have a long weekend with the people," she said.

Real Estate Institute chief executive Bindi Norwell said:

"Whilst it is good to see new ways to help people purchase their first property in New Zealand, as with any property purchase, conducting adequate due diligence on such a big commitment and decision is very important."