Buy a flat or shared ownership house? Need advice

[KL675]

Need to decide quickly on buying a 2 bedroom, ground floor flat (650 sq.ft) in the town centre (south Buckinghamshire area) at £240K. Or buying 45% shares in a 2 bedroom Semi-detached new build house (1020 sq.ft) priced at £450k. The house is desirable and one of four on its development so should be easy to sell in 7+ years but with rent and service charge increasing every year, I don't want to get trapped.

The monthly repayments will be near enough the same (£1500/£1600 pm). The difference is that 86% of that is going straight to the mortgage for the flat. Whereas only 60% is going to the mortgage for the house and rent typically increases 3-4% per year.

We have a 1.5 year old so is a bigger house, small garden, driveway more practical than a ground floor flat with small patio. Thanks for any help/advice. What would you do?

Your 1.5 year old won't be impacted with either choice really, not just yet anyway.

Personally, would not go leasehold/shared ownership route, at all.

Just posting this list for extra information, may help better inform your decision @KL675

I did shared ownership I think it's fine if it's a housing association one and it's your only route to buying. As you can afford the flat then that would be better for you financially in the longer term. So you need to weigh up finances versus quality of life now. Which is best for secondary schools the flat or the house, as you may want to stay that long

Honestly I'd save up more. Leasehold is not good at the moment because the leasehold and reform act has yet to decide how current leaseholders are to be treated. There are too many issues with management costs and very little practical protection for leaseholders. Also there's a surplus of 2 bed flats on the market at the moment due to the rra and they should be a lot cheaper than they are. Don't forget to factor in service charges at £800 a quarter or more.

Shared ownership is not great either, you're paying rent with none of the benefits and have to deal with a housing association. You have to do the repairs yourself.

It really is worth saving more or pushing your mortgage provider to secure a higher mortgage. Try a broker maybe.

As PrincessofWales said, if you possibly can, you would be better off waiting and continuing to save. Leashold flats are starting to nosedive. The number of threads that pop up on here from people who cant sell them is increasing - they have become quite undesirable. If you buy one it will almost certainly drop in value over the short term and you would have been better off renting.
I think borrowing interest rates will head north again this year. That's also going to have a knock on effect on the next "least desirable" property class which is shared ownership. I think we also have another round of tough inflation and cost of living increases to get through too. The whole housing market is likley to slump. If you dont absolutely have to I wouldn't buy now.

I agree with others about not doing either, having researched extensively over the past few months to buy something this year as a FTB. The number of flats up for sale now is huge, many on the market for months and months, often reduced.

Not mentioned is that shared ownership properties are notoriously difficult to sell because you have to deal with the housing associations rules and buyers mostly prefer to buy the traditional way. Also, you have to pay fees every time you staircase. The winners are always the housing associations.

I know the area is expensive but I would save more for a bigger deposit on a freehold house. If this isn’t a possibility within the next few years, then buy a share of freehold flat. Don’t get anything with a leasehold tenure.

It depends on the specific leasehold terms on the flat as to whether it’s a good idea.

No one wanted the place I recently bought because it was marketed at 82 years left (and was very shabby). But on closer inspection the sale included share of a freehold company and the cost to increase the lease to 999 years was £500. Theres no ground rent and service charges are stable.

So I’d say shop around the leasehold properties and see what the terms amd conditions are. That option should be better financially longer term than shared ownership (if you check the details) if you plan to stay a while.

But - The suggestion above about schools (particularly secondary more than primary) is a good one. Also are you planning a bigger family so Youll need more space?

good luck