Proppie Review; Shared property ownership

Proppie makes it easier for people to get into the property market sooner. People can find each other on Proppie as well as get legal advice and help with getting loans. Read on for the full Proppie review..

Verdict: Proppie has low fees, shared property ownership would suit a lot of people who cannot afford to buy on their own, but do your own research.

Introduction

There is an ongoing property affordability crisis which means it can be impossible for many people to save enough money to buy their own home. People who want to buy part of a property can get together and share ownership in a property. If you choose to live in the property you will pay rent to the other property owners, but you only pay rent on the part that you don’t own. As well as helping people get together, Proppie also helps people with the legal aspects of co-ownership. The service is not expensive as Proppie only charges 1% of the value of the property and you don’t have to pay until settlement. If you want to start owning property sooner, it is worth checking out Proppie as it might be a smart option for you.

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What is Proppie?

Proppie¹ was an Australian founded start-up. It’s a company that allows you the option of owning part of a property. Groups of people get together and buy a property with the help of Proppie. You can buy the property as an investment or you may decide to live in the property and pay rent to the other owners. Proppie helps you find your buying partners and helps with getting a mortgage and the various legal requirements of property buying.

How does it work?

You register with Proppie and set up your profile. You will need to provide Proppie with information such as your budget and what percentage of the property you would like to own. Of course, you also need to tell Proppie whether you want to live in the property or invest in the property. When you are searching for a property on Proppie, you need to give the reason for buying a property. Then you choose the property type and the number of bedrooms, bathrooms and car spaces. After that, you give your minimum and maximum price range. If you know what suburb you want, then you can let Proppie know. Otherwise, you can do a more general search, and Proppie will let you know what is available after you answer a lot of questions about the location, such as whether you need to be close to transport or schools. For some, being near good cafes is essential, and Proppie asks about that too!

You can search for suitable properties on Proppie, or you can import properties from other real estate websites. Once you have decided on your property you need to find a team to buy the property and it may not be easy to find someone to team up with you. Before you buy the property, you will need to create a co-ownership agreement. Once all of that is done, you and your team can make an offer for the property. Proppie matches users based on their preferred property location, their budget and their preferred piece of the ‘property pie’. Proppie will help you with all the steps including helping each member of your team to get loans for the property.

You can also sell your share of the property any time that you want. You can either offer your share to your team or you can list it on Proppie for someone else to buy. That means that if someone on your team wants to sell, you will be able to get a greater share of the property.

If you decide to live in the property you are buying, you only pay rent on the share of the property that you don’t own. According to Proppie, it is important to have the rent reviewed every year to ensure that whoever is living in it is paying a percentage of the current market value.

What are the financial benefits of using Proppie for shared ownership?

You can make a lot of savings by using Proppie. First of all, you can divide the costs associated with buying the property. You share costs such as the deposit, stamp duty, and legal costs and you pay the same percentage as your ownership percentage. This is likely to be a significant saving.

How does rent get managed?

It is a good idea to use a property manager². It’s especially important to have a property manager if one of the Proppie team is planning on living in the property. If you are an investor, you want to maximise your income, but a renter will want the lowest possible costs. By using a property manager, you can avoid disputes as the property manager can advise you on the current market value of the property.

 Does Proppie allow people to get into the housing market sooner?

People who use Proppie will definitely be able to buy a property sooner than if they decide to do it by themselves. They won’t need to wait until they have saved up for a deposit and all the other expenses associated with buying property.

How does property co-ownership work?

There are different co-ownership types: joint tenants where the property is owned jointly and if one of the owner dies, the other owner will automatically gain ownership. The other type is tenants in common where each person owns part of the property and can do anything they like with their share of the property. They can sell it or leave it to someone else in their will. For more details, read The Ultimate Guide on Joint Property Ownership in Australia³.

What if you don’t have someone in mind to share ownership with?

Even if you don’t know anyone who is willing to share in the purchase of a property, Proppie can help you with that. One of the best things about Proppie is that you can easily find like minded people who want to invest in the property market and those people might already have a property in mind, saving you a lot of time researching properties.

How much does it cost to use Proppie?

You don’t have to pay anything to use the Proppie website or to team up with other users. Proppie charges a service fee when you actually buy your property and it will cost 1% of the property value and is charged at settlement. There are also legal services available on Proppie and you may have to pay for that as well, but it will depend on the services that you choose. For more information about Proppie legal services see Proppie | Lawlab Conveyancing⁴.

How much assistance does Proppie provide with setting up shared ownership?

Shared ownership⁵ can be complicated and Proppie provides a fair bit of help with getting it set up. Proppie helps each member of the team to find a mortgage since each member of the team needs to use the same lender even though the loans are separate. Proppie will help with that. Proppie communicates with the property seller, but not necessarily to do negotiations. You can choose to get help and advice from a Proppie Pro who can give you advice on all aspects of the purchase including negotiations. Proppie also provides appropriate property lawyers who can help you with the documentation.

Who chooses the property?

Proppie does not provide any properties for you to select from. Instead the buyers are responsible for finding properties. Anyone can choose the property. If you have searched some real estate websites and found the property you want, you can add that data to Proppie and wait for people to join your team. You can also look at the properties that someone else has chosen on the Proppie website.

Advantages of using Proppie

• Proppie has access to legal services and can help you to make appropriate agreements to protect each member of the Proppie team. There are different types of conveyancing agreements available. The agreements differ depending on the group that is buying the property and how they all plan to use it. Some of the plans are even free.
• You might want to get together with someone to buy a property, but you don’t know anyone who is interested. Proppie can help you find other people like you. You can either join the team of someone who has already decided on a property or you can add your own property and form your own team.
• You don’t have to wait until you have saved all of the money necessary to buy property on your own. You can get into the property market much more quickly, if you share the costs with someone else – this could mean you are taking half the risk too.
• Proppie fees are low (1% of value of property)
• Proppie has a blog with heaps of articles related to property ownership and co-ownership
• There are handy calculators on their website (Buying/Selling, Repayments, Stamp Duty Calculator)

For more Information about Proppie, you can read Australia’s First Matchmaking Platform for Property Has Launched, Helping Millennials Become Homeowners — The Latch⁶.

“Proppie matches two or more users based on their budget, property location and preferred “piece of the pie,” taking the hard work out of finding and purchasing a house, unit or apartment, with flexible contribution splits and the added security of a legally protected co-ownership agreement — so there are no awkward conversations or negotiations.”

thelatch.com.au/proppie-australia⁶

Disadvantages of using Proppie

• You might have to wait a long time to find enough people to join you in buying a property. If you go to the website, you will find that most of the teams that you can join on Proppie are in Sydney and Melbourne with a few in other cities. If you are interested in regional cities, you might find it difficult to get a team together.
• Although Proppie says that they can get around the issues with one of your team defaulting on payments, problems and disagreements can arise. It may not be easy to resolve them, even with a legal agreement, especially since you may be sharing the property with total strangers.
• What happens if one of your team wants to sell out, but nobody wants to buy that person’s share? Things could get very uncomfortable, especially if they need to sell out because of financial problems.

How many people are using Proppie?

Proppie is a fairly new website that has been around since 2021. It is hard to know how many people are using it as that number is not shown on the website. Currently, there are nearly 100 properties listed on the site with people who are waiting to team up with someone to make the purchase. There are probably many more groups who have already made their decision to buy, so it is safe to say that quite a few people have used this service since it started.

Is Proppie really worth it?

Proppie makes it easier for many to get into the property market, especially amidst rising property prices, so if you are a group of friends or family members who want to buy a property together and want to be sure that you are all protected legally, Proppie might be for you. It could be very difficult to organise things properly by yourself and you can save yourself a lot of time and worry if you use Proppie. If you are not afraid to take the risk of teaming up with a group of strangers to buy a property, again Proppie could be the answer. There is a downside though. You might not be able to find anyone to share the property you want and there are risks involved, especially if you team up with total strangers. Although the concept is a good idea for many, especially in our current economic climate, it is not for everyone.

“With Proppie, you can share the costs of a deposit and the repayments while enjoying full legal protection. So Proppie can help you to make a start in home ownership by reducing your upfront costs in a BIG way!”

proppie.com.au/how-it-works¹

Conclusion

Proppie has been helping groups of people get a foot in the door of property ownership, or climb the property ladder since 2021. It’s a real shake up of the real estate industry! Proppie makes it easier for people to find each other and buy a property, knowing that the legal requirements have been met and their own part of the property is secure. It’s not always easy to find someone to share in ownership and Proppie makes that easy. Whether you want to buy a property with people you know or are willing to team up with total strangers, you can get the help you need from Proppie. 

Reference List:

1. Proppie. Accessed online at https://proppie.com.au/home on 12 Jan, 2023.
2. ‘What Does a Property Manager Do? Run Your Rental So You Don’t Have To’. Daniel Bortz. 4 Nov, 2022. Accessed online at https://www.realtor.com/advice/rent/what-does-a-property-manager-do/ on 12 Jan, 2023.
3. ‘The Ultimate Guide on Joint Property Ownership in Australia’. Accessed online at https://propertytaxspecialists.com.au/joint-property-ownership-in-australia/ on 12 Jan, 2023.
4. ‘Case Study: Proppie’. Accessed online at https://www.lawlab.com.au/partners/case-studies/proppie on 12 Jan, 2023.
5. ‘Property Co-ownership 101’. Vanessa Paech. 19 Sep, 2018. Accessed online at https://www.realestate.com.au/advice/property-co-ownership-101-2/ on 12 Jan, 2023.
6. ‘Australia’s First Matchmaking Platform for Property has Launched, helping Millennials Become Homeowners’. Laura Roscioli. 1 Oct, 2021. Accessed online at https://thelatch.com.au/proppie-australia/ on 12 Jan, 2023.