Would you buy a new build shared ownership flat?

[DFOD]

In Ealing as a first time buyer? What are the pros and cons and anything to look out for?

Is it a poor financial decision? It’s for a young relative trying to get his foot on the ladder.

It’s not a poor decision if it’s their only way to get on the property ladder.

But it has disadvantages such as having to pay 100% of the maintenance costs while only keeping a smaller percentage of any price gain - the % they own. They need to Google all the implications of shared ownership

Not necessarily. Usual questions re flats plus extra for shared ownership
leasehold? How long?
maintenance costs, insurance et. - how much, when, increases.
any covenants
any restrictions on sale
opportunity to increase ownership element
legal cost may be higher as non standard ownership

perhaps research similar flats in the area - do they sell? What is the overall costs compared to renting?
with less common ownership structures such as these, it is worth standing back and saying how easy is it to sell later on and who would buy it? Does the shared owner have first right to buy back and at what price?

I bought a share in one and I would say don't do it.

Service charges can go up really fast, your rent will be linked to the inflation index which at the moment is quite high and will go up every year. You will have to pay for all repairs. Many housing association are rubbish when it comes to common parts maintenance. The fire safety scandal also means it can be harder to get a mortgage to buy a new-builts or to sell them back.

If you must, look into buying a share-ownership house but not a flat.

The housing association also charges fees for everything (resale process, leases extension). Subletting is not allowed.

Personally although I pay a low rent still compared to if I was renting this flat in London on the open market and it was the only option for me at the time to get my own place, I regret doing it to a degree because now that I want to sell the process is much harder.

Thank you @SallyLockheart and @Twiglets1 - some really important points (compromises) to investigate and consider. I think one of the biggest is the resale and the potential of getting “trapped” - if you didn’t staircase to 100%.

Also on another link I looked at it appears that you can’t sublet / rent out SO which might well be flexibility needed by my relative at some point due to age, career and relationship status.,

I also generally advise against new builds as unless it’s a rising market they initially depreciate in the short term.

I went to have a loook at some.
But they were very over priced. They were the worst views and lower floors of the building but the full price would be the same as the higher floors with better views (view of tube line v view of Thames). And they had less good fixtures than the regular flats.

That said including rent portion and service charge it would only have been slightly more per month for a 2 bed than my rent is on a one bed so I could see the appeal.

One other thing to look out for, if the sale price is less than the purchase price is there still a clawback risk. Not all properties sell for a profit.

Once the nephew understands the financial risks, look at the reputation of the street area and the builder for a emotional would I buy reaction.

And look at who controls the enforcing all the terms of the lease, is there any owner input as Whitehorsegirl points out he could be in a situation where the rules are always imposed from a housing association, or if owners are involved he should look at what is involved to be an active participant. And what the voting rights, if any exist, each party have in the complex.

My first flat was part ownership in an area very very close to Ealing. It was fantastic and I couldn't have gotten on the property ladder any other way. Our rent and service charges were reasonable and didn't rapidly escalate.

The only complaint I had is that selling it was a bit of a PITA as we had to go through a buy the housing association approved.

I’m not completely against them as I recognise they are the only way to get on the property ladder for many people. But other options are better if you have them.