JVs: Joint Ventures

In a joint venture (JV), two or more people combine what they each bring to a property project. A common set-up is one partner providing the money and the other finding the deal and managing the work. Profits are then split in whatever way you agree.

JVs let experienced investors take on more projects and let people with cash invest without doing the work themselves. They also go wrong in predictable ways, so the agreement matters more than the deal.

Each structure has different tax and legal effects. Take advice from a solicitor and an accountant before choosing.

• •A contractual JV agreement between the partners, with the property held by one of them or jointly.
• •A special purpose vehicle (SPV): a limited company that owns the property, with the partners as shareholders and a shareholders' agreement setting out the deal. This is the most common structure for holding property together.
• •A limited liability partnership (LLP), which is sometimes used for development projects.

• •Who contributes what: cash, time, expertise and borrowing power
• •How profits and losses are split, and when money is paid out
• •Who owns the property and how the title is held
• •Who makes which decisions, and what happens if you disagree
• •Who pays if costs overrun or the project runs late
• •The exit: the timeline, and whether you sell, refinance or one partner buys the other out
• •What happens if a partner dies, becomes ill, runs out of money or wants to leave
• •Any personal guarantees given to lenders

If someone pools money from investors who take no part in running the project, the arrangement may count as a collective investment scheme. Promoting investments to the public is also regulated. Both are activities the Financial Conduct Authority (FCA) regulates, and doing them without authorisation can be a criminal offence. Genuine two-party JVs where both partners are actively involved are usually different, but get legal advice if you are unsure.

• •Use your own solicitor, not one shared with your partner.
• •Take security where you can, such as a legal charge over the property or shares in the SPV.
• •Pay money through a solicitor or into the SPV, never into a personal account.
• •Check your partner's track record: their Companies House history, previous projects and references you can speak to.

• •No written agreement, or pressure to sign quickly
• •"Guaranteed" returns. Property investment always carries risk
• •A vague exit plan or no timeline
• •Requests to send money to a personal bank account
• •Unwillingness to let you speak to previous partners