Considerations Before Buying a New-Build Shared Ownership Home

While shared ownership schemes promise an affordable route to homeownership, prospective buyers need to be aware of several potential pitfalls and challenges before making their decision. Recent findings from the House of Commons Levelling Up, Housing and Communities Committee have highlighted significant concerns about the scheme's effectiveness in delivering affordable home ownership, with many buyers facing unexpected difficulties and costs that can make the arrangement financially unsustainable over time.

One of the most troubling trends to emerge in recent years involves the treatment of shared ownership buyers by housing developers. Many developers have begun treating these purchasers as "minority owners," insisting that complaints and quality issues must be raised by the "majority owner" - typically the housing association. This approach has created a frustrating bureaucratic maze for homeowners, who often find themselves caught between developers and housing associations when trying to resolve issues. The resulting delays in addressing urgent problems and confusion over repair responsibilities have left many shared owners feeling powerless and stressed, particularly during the crucial snagging process.

Quality control in new-build properties remains a significant concern. Our data reveals that the average new home contains more than 140 defects, many of which remain hidden without professional inspection. The situation becomes even more complex for shared ownership buyers, who often face additional layers of bureaucracy when reporting issues. Developers' reluctance to address problems promptly, combined with the confusion over ownership responsibilities, can turn what should be an exciting journey into home ownership into a frustrating ordeal.

The financial considerations extend far beyond the initial purchase price. Shared owners face the unique challenge of being responsible for service charges for the entire property despite only owning a portion. These charges can increase unexpectedly, placing significant strain on household budgets. Additionally, the rent on the unpurchased portion of the property often rises above inflation, while owners remain fully responsible for repairs and maintenance costs. Many shared owners also discover that affording additional shares through the staircasing process becomes increasingly difficult over time.

Building safety and maintenance present another layer of complexity. Recent investigations have revealed that shared owners often bear complete liability for safety improvements despite their partial ownership status. The involvement of multiple stakeholders in building management decisions can make coordinating repairs a complex process, with shared owners frequently finding themselves with limited influence over decisions that directly affect their homes. These complex ownership arrangements can lead to delays in essential maintenance and confusion over responsibilities.

Leasehold arrangements add another dimension of complexity to shared ownership properties. Prospective buyers need to understand the challenges they might face with lease extensions, sub-letting restrictions, and their limited rights compared to traditional leaseholders. These factors can also create significant difficulties when owners decide to sell their property, potentially limiting their ability to move on when their circumstances change.

For those considering shared ownership, thorough preparation is essential. This begins with comprehensive research into both the developer and housing association involved in the property. Understanding their track record and reputation can provide valuable insights into potential future challenges. Prospective buyers should also ensure they have a realistic budget that accounts for all potential costs, including service charges and maintenance expenses.

Independent legal advice proves invaluable in understanding the full extent of rights and responsibilities associated with shared ownership. A professional snagging inspection before completion can help identify potential issues early, though buyers should also fully understand the process for reporting and resolving problems that may arise later. The building's management structure and service charge history deserve particular scrutiny, as these factors can significantly impact long-term affordability.

The government has recently introduced reforms aimed at improving the shared ownership experience for new properties. These changes represent a step forward in addressing some of the scheme's historical shortcomings. However, prospective buyers should carefully consider whether these improvements sufficiently address their concerns about entering into a shared ownership arrangement.