By James Warrington · Finance & Legal
Four couples. Long holidays together in rented villas every summer. Someone does the arithmetic one evening and notes that their four rented weeks per year are costing a combined €18,000–€22,000, and that a mortgage on a jointly purchased property might cost less. Three bottles of wine later, the idea has momentum.
The concept is not wrong. 4-way co-ownership of a holiday property can work financially, and the numbers genuinely are compelling. What typically goes wrong is not the purchase — it is the absence of a legal framework governing how the four parties share, maintain, and eventually exit the property. The friendship usually survives the purchase. It may not survive the first disagreement about August availability.
The Numbers: 4-Way Purchase of a €640,000 Algarve Villa
A 4-bed villa in the Algarve with pool — the kind of property that works well for four family-sized groups — is available in a range of €580,000–€720,000 in 2026. We'll use €640,000 as the example.
Individual share: €160,000 per couple.
Assuming each couple takes a mortgage on their share:
- Deposit (25% on a Portuguese non-resident mortgage): €40,000 per couple
- Mortgage loan: €120,000 per couple at 3.9% over 20 years
- Monthly mortgage payment: approximately €710 per couple per month
- Annual mortgage cost per couple: €8,520
Running costs: a 4-bed villa with pool in the Algarve costs approximately €14,000–€18,000 per year to maintain (pool service, garden, utilities, insurance, local rates — IMI — management company). Divided by four: €3,500–€4,500 per couple per year. Monthly: €290–€375.
Total annual cost per couple: approximately €12,000–€13,000.
Compare: four weeks of renting an equivalent villa at high-season rates of €4,500–€6,000/week costs €18,000–€24,000 per year per couple if renting entirely at peak season prices. Even at lower mid-season rates of €2,500–€3,500/week, four weeks costs €10,000–€14,000 annually.
The co-purchase pencils out slightly better than renting at mid-season rates and substantially better than renting at peak rates — and the couples are building equity in an asset rather than paying a landlord. On a 10-year horizon with 4% annual capital appreciation, the villa reaches approximately €950,000. Each couple's share is worth €237,500. Against their total out-of-pocket over 10 years (deposit €40,000 + annual running share €12,500 × 10 = €165,000), they have recovered the majority of their outlay in the asset value alone.
The Legal Framework That Makes It Work
The purchase requires a properly drafted co-ownership agreement, ideally registered with the conveyancing notary and referenced in the title deeds. The agreement needs to cover the following, at minimum:
Ownership structure. The simplest structure is direct co-ownership as tenants in common (in English law terms) or the equivalent in the property's jurisdiction — each couple owning an undivided 25% share, freely inheritable and transferable subject to the restrictions below. Avoid joint tenancy, which creates right-of-survivorship complications and is inflexible on exit.
Usage allocation. Each co-owner is entitled to 13 weeks of usage per year (25% of 52 weeks). Peak summer weeks — the 8 weeks of July and August — are the critical allocation. The agreement should specify a system: typically either a rotating annual priority system (each couple gets their preferred 2 peak weeks, rotating order changing each year) or an auction system (co-owners bid weeks against a central account, proceeds shared). The absence of any usage-allocation mechanism is the most common source of co-ownership disputes.
Unallocated weeks. Any weeks not used by an owner should be rentable — either directly or through a management company — with rental income shared proportionally. This transforms empty weeks from a cost into partial income. Expect 50–60% of weeks to be rented if all four couples use their full 13-week allocation, generating approximately €30,000–€45,000 gross annual rental income at mid-range Algarve rates.
Maintenance reserve. A mandatory annual contribution to a ring-fenced maintenance and capital expenditure reserve (suggest €2,000 per couple per year minimum) prevents disputes when the pool pump fails or the roof needs resealing. The reserve is held in a joint account accessible only with two co-owner signatures.
Decision-making. Routine maintenance: any single co-owner can authorise expenditure under €1,500. Major expenditure (above €1,500): requires majority (three of four) approval. Capital changes to the property (extensions, significant renovation): requires unanimous consent. The hierarchy prevents deadlock on routine matters while protecting against unilateral major decisions.
Exit and buy-out rights. The most important clause. If one couple wants to sell their share, the agreement should specify: (1) right of first refusal at an agreed valuation method (typically two independent valuations averaged); (2) a 90-day window for co-owners to match any external offer; (3) a drag-along provision allowing 75% of owners to force a full property sale if agreement to buy out the departing co-owner cannot be reached; (4) a forced-sale mechanism at year 10 (or any agreed term) unless all parties vote to continue.
Without a buy-out mechanism, a single co-owner who wants to sell and cannot find a buyer willing to purchase a 25% undivided interest (which almost no buyer would purchase on the open market at fair value) can force a judicially supervised partition sale in most jurisdictions — a slow, expensive process that typically produces a sale price 15–25% below open-market value.
Joint Mortgage Liability
The most significant financial risk in co-ownership: if the co-owner couples are all on the same mortgage, all four couples are jointly and severally liable for the full mortgage debt, not just their 25% share. If one couple defaults, the other three are liable to cover the full payment to prevent default.
The cleanest solution: separate mortgages on separate ownership shares, where the lender will allow it. Some Portuguese and Spanish banks will structure this for co-ownership transactions. Where a single mortgage is unavoidable, the co-ownership agreement should include a mechanism for the other couples to buy out the defaulting couple's share at a distressed price rather than absorb their mortgage burden.
Is It Worth It?
Yes — if and only if the co-ownership agreement is done properly. The financial case is clear. The legal framework that makes the structure sustainable requires €3,000–€5,000 of legal cost across the group at the outset. That investment is what separates the co-ownerships that work from the ones that end in property partition proceedings and former friends who do not speak to each other at school functions.
The conversation to have before the lawyers is simpler: are all four couples committed to this for at least ten years, do they agree on how they want to use the property, and can they have difficult conversations about money without it derailing the friendship? The legal structure can protect against disagreement. It cannot manufacture alignment that was not there to begin with.