What Is Joint Ownership or Co-ownership of Property in South Africa?

With exorbitant property prices, many young adults are opting to buy property together. This trend is not only for married couples and makes much more economic sense than sharing the rent.



How Does It Work?


Shares in the property don’t have to be equal. For example, if one co-owner contributes 60% of the purchasing price, it doesn’t mean they own 60% of the property but benefit from 60% of the profit when it comes to selling the property.


Sale or Lease


Although problems could arise when one party wishes to sell while the other does not, these issues can be addressed in the purchase agreement.


The property cannot be sold or rented unless all co-owners agree. Owners must also agree when one partner wishes to sell their shares in the property.


Contract/Agreement


It’s strongly advised to have a legal agreement drafted that stipulates what happens should one partner decide to sell. For example, it should state that the other partner has the first option to buy the share. The other option is to agree on selling the entire property and then dividing the profits according to the shares held by each partner.


It’s advisable to discuss renting the property and being prepared for this eventuality, especially when partners occupy the property together.


One essential fact to keep in mind is that banks will demand co-owners be jointly and severally liable for the mortgage loan. This means that, should one partner not honour their repayment obligation, the other partner will remain responsible, so choose your property partner carefully, and have candid conversations about all possible financial eventualities!


Always seek professional legal advice from an experienced property lawyer to draft your purchase agreement.


Important Considerations


Make sure to tick the following boxes before signing anything:

  1. All partners should ideally have cash on hand to cover a deposit. Your ability to offer a deposit increases the chances of a successful home loan application.

  2. All parties should have a clean credit record and no SARS issues or outstanding tax debt. Otherwise, the property cannot be registered in your name.

  3. You should know that your partner/s qualify for a home loan.

  4. Of course, the affordability of the monthly mortgage should be determined before you even start house hunting.

Benefits of Joint Ownership


Sharing ownership opens the door for young adults to enter the property market much sooner than they could individually. Joint ownership allows you to enjoy a bigger property with more amenities, for example, a swimming pool or other luxuries you wouldn’t have access to individually.


If partners occupy the property, sharing utility bills, maintenance, and other household expenses could create a more comfortable financial footing for all involved.


The bottom line is to ensure you understand the legal implications and draw up an airtight agreement with the help of an experienced advisor.