Co-Leasing, Co-Investing and Co-Living: Everything you need to know about shared property models

Affordability constraints and shifting lifestyles are reshaping South Africa’s property market, with more people exploring flexible living and collaborative investment options. Shared property models like co-leasing, co-investing and co-living are gaining traction for their affordability and accessibility to prime locations.

Whether it’s friends renting together, siblings buying an investment property or digital nomads sharing space, shared property in urban settings has increased in popularity over the years.

“We’re seeing demand across all age groups – from young professionals to seasoned investors – who see the value and reduced risk in this particular approach,” explains Grant Smee, CEO of Only Realty Property Group.

What You Need to Know

Smee unpacks the key ‘need-to-knows’ for prospective owners and tenants looking to embark on a co-leasing, co-investing or co-living arrangement as follows:

• Co-Leasing: Joint Tenancy, Joint Accountability

A co-lease, or joint lease, is a rental agreement in which two or more individuals sign the same lease and share equal legal responsibility for the entire property. This type of arrangement is commonly used by roommates, friends, couples or business partners sharing a commercial space.

However, Smee notes that it’s also typical for landlords to draft lease agreements naming only a primary leaseholder. In such cases, especially in co-living situations, it’s advised that all parties involved sign a separate agreement that clearly outlines each person’s responsibilities.

“These contracts can typically be drawn up on your own or with the help of a professional, both of which are legally binding once signed.”

He notes that in a case where two or more tenants sign a lease jointly, they are typically held jointly and severally liable. “This means either tenant can be held responsible for the full rental amount or any damage to the property, regardless of who caused it. If one of the tenants chooses to move out over the period of the lease agreement, then a new contract will need to be drawn up.”

Smee strongly recommends that the co-leasing tenants’ sub-agreement details the following:

• Financial obligations and how payments are split
• Responsibility for deposits and damages
• Process for early termination
• Replacement of departing tenants

“Early termination is a common source of conflict, so it’s vital to include clear terms,” says Smee. “Treat this like a business agreement, even among family or friends and ensure responsibilities around deposits and replacement tenants are clearly outlined.”

• Co-Investing: Shared Ownership, Shared Risk

Co-investing allows buyers to share the capital and returns of property ownership, with collective buying in South Africa allowing for up to 12 applicants on a single home loan by some financial institutions. “From dual-owner homes to investor syndicates in multi-let properties, the benefits include lower upfront costs and risk distribution,” adds Smee.

He cautions that collective ownership often brings added complexity, highlighting the importance of establishing a clear legal structure. He outlines several key factors to consider:

• Ownership shares and capital contributions must be documented
• Roles and responsibilities must be clearly outlined, including who manages tenants, maintenance and accounting
• Clarify profit and loss sharing arrangements
• Include exit strategies outlining how the property will be sold and how one investor may exit the partnership
• Include the dispute resolution processes

“A formal partnership or co-ownership agreement, ideally drafted by a legal professional, is crucial to protect everyone’s interests,” he emphasises. “We’ve seen too many cases where informal agreements lead to costly disputes.”

• Co-Living: Shared Space, Shared Responsibility

According to the latest census by Stats SA, approximately 4.7 million South Africans now live with an unmarried partner or in a cohabiting arrangement, indicating just how mainstream shared living has become.

In a co-living situation, a residential space is shared by multiple (often unrelated) people, typically with private bedrooms and shared common areas. The concept has taken off in South Africa’s high-cost urban areas.

To mitigate potential issues, Smee advises that all housemates draft a written agreement covering essential topics:

• Expense breakdowns such as rent, utilities or Wi-Fi
• House rules around communal living, such as guests and quiet hours
• Cleaning schedules, chores and shared responsibilities
• Exit terms in case one party wants to leave

“All agreements, payments and relevant communications should be documented and stored,” notes Smee. “This can be vital if legal disputes arise. Having upfront clarity will help reduce disputes and ensure all parties are on the same page.”

Multi-Let Investments and the Rise of Shared Models

South Africa’s rental market is booming, with average rents hitting a seven-year high of R9,132 in Q1 2025, according to PayProp. Since September 2024, rentals have outpaced inflation, rising between 1.2% and 5.4% (Rode Report).

This growth makes multi-let properties especially appealing. By dividing a property into multiple rental units, investors enjoy higher yields and reduced risk through diversified tenants.

“The multi-let model works well with co-investing,” says Smee. “It offers steady cash flow, even if a unit is vacant.” However, he cautions that with 18.3% of tenants in arrears, careful screening and planning for defaults are essential.

A Changing Property Landscape

Shared property models are unlocking new opportunities for South Africans, whether to live, lease or invest. As affordability challenges persist and lifestyle needs evolve, co-living, co-leasing and co-investing are set to shape the future of real estate.

“Ultimately, these shared models allow more people to participate in the property market,” concludes Smee. “But they must be approached with proper planning, transparency and legal safeguards to protect all parties involved.”

Issued by Jess Gois