Buy To Let: Property investors are getting together via new websites

Websites that were set up to bring flat-sharers together are being used by investors to find partners for buy-to-let purchases. Sites such as co-buywithme.co.uk and shared spaces.co.uk appeared last year to help first-time buyers get together and buy properties jointly. Now investors are jumping on the bandwagon, clubbing together to share the work and increase their borrowing power.

The bigger investment pot allows the group to buy better quality properties, such as terraced houses instead of two-bed flats. The cost of purchase is much less too – buying one house is cheaper than buying four flats, and the group can use the new "mates' mortgages" designed for groups of unrelated buyers.

A group of investors can share the work involved in researching and managing the property, and the group may well include people with special skills. The ideal group would include, for example, a lawyer, a tax accountant and a builder, though it would be a lucky investor who found such a valuable pool of expertise.

Co-buying investment is growing rapidly, according to Stephan Michaels, who founded co-buywithme. co.uk a year ago with his elder brother Theo.

"Since we launched, more and more investors are joining, including many from Australia, New Zealand, Canada and even France," he says. "About 30 per cent of our members are now investors looking to co-buy with others."

Surprisingly, the influx of investors into co-buying websites is benefiting many first-time buyers as well.

"Investors are now matching up with buyers who want to actually live in the property," Michaels says. "They buy a two-bed flat, one partner lives in one bedroom and they rent out the other to cover the investor's share."

As a result, the first-time buyer gets their foot on the property ladder, and the investor gets the property managed for free by someone on the spot.

Investors can also help families get their own roof over their heads. "Co-buying works well for families, allowing them to get their own place or a larger house than they might otherwise be able to afford," Michaels says.

In this case, the family pays rent to the investor on his share in the property. If there is a spare bedroom, this can be rented out under the Government's Rent a Room scheme to get a possible tax allowance of £4,250.

Rookie investors are also benefiting from co-buying, by teaming up with older, more experienced investors who can guide them through the process, steer them away from the pitfalls and encourage them when things do not go as well as they hoped.

Even established operators with large portfolios can get a lot from a partnership with a newbie, such as local knowledge of an area the experienced landlord would like to expand into but cannot spare the time to research properly. New landlords can also do the leg work involved, such as collecting the rent and doing routine maintenance.

Despite the advantages, co-buying is not a risk-free process. As with dating, the prospective partner may not be all they claim to be. Initial contact should be restricted to email until you know enough about the other parties to swap phone numbers – and even then only mobile numbers should be divulged. The first meetings should be in public places.

And before passing any money over, it is well worth buying credit and police checks to make sure, just in case they have a history they have carelessly omitted to mention.

The partnership must also be set up on a clear legal basis enshrined in a Deed or Declaration of Trust, a document which sets out how much each partner puts into the enterprise, how decisions will be reached, how long the property will be held and a clear exit strategy should any partner need to get out early, for example.

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