Downsides of shared ownership/leaseholds?

[Globules]

DS is looking to buy his first property.

I've had 3 friends recently stung by maintenance charges in the flats they own. They have been charged exorbitant prices for works carried out on top of the large monthly sum they already pay.

I've also had 2 friends over the years who regret buying shared ownership properties. They've found them hard to sell on/been unable to purchase the property fully due to paperwork.

DS can't afford a house.

What can I point him to to help him make an informed choice about his first home purchase?

Home prices at best will stagnate over the next few years. At worst they may be falling as early as next year. Once he gets tied in to SO it could be very hard to get out of. Can he continue to save a better deposit and wait for the dip in prices ?

Just type "shared ownership issues" into Google and start working your way down.

With flats, big issues are:

cladding. Post grenfell flats need certificates to say they are safe. Make sure the flat has one.

if you want to avoid the cladding issue look at flats that are low rise or a house divided into upstairs and downstairs

sone flats come with share of freehold not leasehold. This means you own a share in the company that owns the freehold and does repairs to the shared area. In a house divided into two there will be two shares. In a bigger building more.

From what I've seen with friends who bought into shared ownership, it's largely for newer builds and works out more expensive than buying the older place round the corner.

Could he buy with a friend to get on the housing ladder? Another friend did this in an expensive area when she couldn't afford to buy on her own and they bought a small house. The uplift in prices over five or six years meant she and the co-owner had big enough deposits for bigger homes on their own when they sold.

If I were looking to buy now, in London particularly, I’d look for something with outside space and either a very long leasehold or share of freehold, in a low rise block.

I (contra to all the advice) bought and held on to my first flat, a two bed ex council in a building with a lift, with a lovely big balcony. I have had an £8,000 repair bill once during my tenure (14 years now). Its value has soared since I bought. People warn against buying ex council but it is down to the individual block/freeholder ime.

Shared ownership seems to have so many disadvantages you pay for all upkeep but you have to ask permission to make alterations and you still pay rent on the proportion you don't own. Plus when selling the SO have to approve the buyer.

I used to have a shared-ownership flat in London.

The service charge kept increasing, the housing association (freeholder) was not great at maintaining the common parts and as people have already said you need to watch out for any building affected by the cladding scandal.

These flats can be hard to resale too and they are a lot of additional rules set by housing associations.

I would advise your son to look at shared ownership houses instead, even resales ones, if shared ownership is the only thing he can afford.

SO worked out for me in the end as it gave me a safe home for a few years in London and I did manage to sell at a small profit but many people have really some serious issues with SO flats so I definitely would not do it again.

I decided to move out of London to be able to afford a small terraced house. Maybe he could also look at buying somewhere cheaper but with decent links to the capital.

We're nowhere near London.

Really helpful pointer @Octavia64 about the share of freehold. That may be the place for him to begin research.

I don't think he should go for SO apart from as a last resort.

Leasehold is another issue though, he may not be able to avoid leasehold if he's buying a flat in some areas.

Avoid any flats with more than 3 floors in a block, new fire regs means big bills, lady at yoga has to find 70k for fire doors and sprinkler system etc

All of the affordable homes schemes have some downsides. I used to work in planning and dealt with the developers in arranging the S106 affordable housing requirements. I wouldn't touch a Shared Ownership. In my oppinion, out of the options available First Homes and Discount Market Sale are the best of a bad bunch. First homes is 30% and DMS 20% discount in my area. The discount is in perpetuity and its very important to fully understand the re sale restrictions imposed by the LA.
Developers also are crafty in what plots they use for affordable homes, quite often a similar sqft property not on a scheme will be much cheaper than the equivalent non discounted cost! Developers are in the business of making money, the schemes hinder this therefore they will do the bare minimum on those plots.