Leasehold flat or shared ownership a better purchase?

[Idontlookyoung]

I'm at the early stages supporting my child looking for a property.

What's a better purchase for a first time buyer in your opinion?

A shared ownership of a 2 bed house or complete ownership of a 2 bed leasehold flat, where the building has less than 10 flats in it.

Which one do you think will be easier to sell on in future?

As a previous shared ownership owner - I wouldn't touch either with a bargepole currently.

Too many issues.

Neither are my choice.

But house prices being what they are, a FTB with a retail job wage doesn't have the option of a house purchase unless they relocate to the NE.

Honestly. Don't do it.

Shared ownership is a disaster in a stagnant or decline market for prices. I've posted at length about this previously. With the market as it is, I wouldn't touch it. Its too risky.

And leasehold issues on flats are also such a problem that amongst other reasons relating to liabilities on the building (highlighted by cladding) many mortgage companies won't even give mortgages on them. Most flats can only be bought for cash.

With this in mind, you'd be exceptionally naive to buy either even if you are otherwise priced out.

And don't even get me started on service charges you have no control over.

I wouldn’t do either. We bought a leasehold flat 6 years ago, it’s hardly increased in value and the service charge has increased by £37 a month, which I haven’t yet passed onto my tenant, although will be doing next April as no doubt it will increase again 🤷‍♀️

I’d def go for the SO house!

My situation is not really the same as we have a 2 bed shared ownership flat, but I just wanted to chip in.
SO gets LOADS of criticism on mumsnet (maybe —partially-rightly so), but it was a great choice for us.
It’s given us stability (ie a landlord can’t kick you out on a whim) and allowed us to build up equity.

We brought during COVID when the banks removed the 5% deposits so we literally had no choice but to either privately rent or use our £18k savings on a deposit for our flat and I’m so pleased we did it. We have a lovely community hear in the block of ppl (mix of young and older couples/ young families/ single ppl), everyone really gets along. No major issues with HA (altho they’re just a disorganised mess most of the time, but generally get issues fixed within 24 hours).

SO properties tend to be new build which is bloody nice with young kids (good sound proofing! I literally never hear the neighbours). As an fyi we’re in the process of moving to a house outright and no issues with selling, we have a handful of viewings and 3 offers (ok granted we have sold for £6k under what we brought for in 2020 but that’s the market right now, not a reflection specifically on SO).

Just wanted to give some positive perspective on SO as honestly, the amount of negativity about it online is not reflective of our experience at all.

I guess your decision will all boil down to your essential criteria- proximity to schools, general neighbourhood. Have a walk around at different times of day to see what the SO complex is like. Most ppl are just getting on with it, but I mean do HA allow rubbish to be left, anything clearly broken,what the general tidyness standard of the overall site.

I have done shared ownership with a housing association and had a good experience. I think buying outright the leasehold flat is better financially though. Depends on your dc's needs.

What part of the country are they in OP?

The house is probably better, but your DC should check that there's the option to buy the freehold eventually. Some SO houses have 2 leases on them so that the HA can keep the freehold.

How old is the leasehold block?

Persuade them to wait and save if thats a possibility? By this time next year the same money might get them a small freehold home.
Both shared ownership and leashold are going to dive bomb in value. They could end up stuck as mortgage prisoners

The way prices are going, I agree with a PP and would suggest waiting and saving more for a deposit on a freehold property.

They've already got a very healthy deposit.

1 more year saving isn't going to be enough to take it into house level of deposit, even if it were all the wages.

We're in the SE by the coast, so cheaper than commuter SE homes. Prices are an anomaly here as we're one of the several coastal towns WFH Londoners are relocating to in their droves. Prices overall have increased because of this.

In that case I'd go for the SO. It sounds like values will increase reliably.

They should get something in writing from the HA early on that it's possible to buy the freehold though.

I had a leasehold, shared ownership flat in London and there were issues with the housing association (the freeholder) not doing repair to communal area in a timely fashion and with the service charge going up massively each year.

Plus with a flat you get all the issues with the length of the lease, ground rent and the fact that currently flast are not very popular when it comes to resale.

In the end I did sell it for a small profit but I would never buy a leasehold flat or a share-ownership flat again.

Instead funnily enough I moved from London to the SE coast and bought a small terrace.

I think your son should stay away from leasehold flats or try to at least get a flat with a share of freehold so he has more control.

If those are the only two choices then maybe a shared-ownership house might be best as at least he would be able to have something big enough for a family and not need to move.

But make sure you get a solicitor with specific experience of dealing with shared ownership purchases.

Also if it is on a new built estate check whether this is a mixture of social housing tenants/shared-ownership and private owners. Because unfortunately I must say that my estate in London was a mixed one and we had noise and anti social behaviour issues with the social housing tenants, while private owners and shared owners were good neighbours and looked after their flats.

But you do have control, if all the leaseholders get together to buy the freehold. This is very do-able if there are only 10 flats. Why haven't they done it?

I have to agree with some others about not buying either. As a FTB I have researched both options thoroughly for months and concluded both are fraught with too many issues, so will keep on saving to buy a small freehold house. Essentially, your child could end up trapped in that home for years, unable to sell or sell at the price they need to. With a SO house would they even have much disposable income left over after they’ve paid rent, mortgage and charges? Also - fees to pay whenever they staircase.

I think share of a freehold flat may be OK. Can he relocate somewhere cheaper? It doesn’t have to be the north east!

I have lived in a 60% shared ownership house for 25 years. We wouldn't have been able to afford a house otherwise for our family. The good thing about a house is that you do not pay any service charges. The down side is if you can't afford to buy the rest of the share to 100% but when the mortgage is paid off and all my DC move out I will be able to sell up on the open market downsize and actually buy a property with the share I own.

Thanks for all the advice so far.

My ideal is that a stupidly low priced house comes on the market, but i know that won't happen.

I'll discuss things with them and see how they feel.

Shared ownership is leasehold too. You don’t truly own a share of the building, you only own a lease on it, and then pay rent on the part you don’t own as well.

I’d go for normal leasehold over shared ownership as the lesser of two evils. Ideally though, buy freehold if at all possible.

A hobsons choice but I'd choose leasehold flat. I doubt a Shared ownership house is freehold. Shared ownership has mortgage, rent and service charges. Sometimes restrictions on how and who you sell it to.

Massively depends on the SO company. Some are pretty good some are rip-offs.

Leasehold is everywhere in London, and decent flats in sought after locations sell! Of course they do. You can also get a mortgage on one. If the lease is long and charges are reasonable, they sell. So much uninformed negativity on here.

https://www.theguardian.com/money/2026/aug/08/flats-in-england-not-selling-slashed-prices-buyer

Agree with this.

Our was pretty good.

But I'd still say avoid like the plague in the current market. It only works if the market is increasing.

If it's declining or stagnation it turns into a right mess for numerous reasons.

Do a lot of research as both have downsides

You must own a leashold flat and be completely in denial...