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Affordable home ownership

Affordable home ownership is an option for people who can’t afford to rent or buy a property on the open market – it’s also known as ‘low cost home ownership’.

Shared ownership

Shared ownership or part buy, part rent – is aimed primarily at first time buyers who are unable to buy a home outright on the open market.

Under these schemes you can buy a share in a property, normally at least 25% and rent the remainder usually from a registered social landlord. Over time you can staircase up the share that you own if you wish.

Staircasing means that you have the option to buy a greater proportion of your home at a later date. The greater the share you buy, the less rent you will pay to your landlord. Some schemes allow you to staircase up to 100%, meaning you will become the outright owner.

You’ll need to have a household income that enables you to afford to buy between 25% and 75% of the full market value, plus cover the rent on the remainder of the share. You will also need to cover any monthly service charges. To qualify you would need to

  • have a combined household income of less than 90,000. Outside London this is lower at £80,000
  • not own property or be on the title deeds of a property
  • have at least a 10% mortgage deposit for the share you are buying, and be able to raise the money to cover any fees

Most of the homes offered are new build, but some properties are offered by housing associations.

Suitable properties may be advertised on Share to buy. It will give you an estimation of your likely rent, service charge, and mortgage cost on suitable properties.

Shared ownership can be combined with the Government’s help to buy scheme as you’ll only need a 5% deposit on as little as 25% of the property’s value.

Help to buy

The help to buy scheme is an equity loan provided by the Government.

You’re lent up to 40% of the cost of your new build home in London from the Government. So you’ll need a minimum 5% deposit and a 55% mortgage to make up the rest.

The equity loan from the Government runs either until the property is sold or the mortgage is redeemed, up to a maximum of 25 years.

For the first 5 years you own your home you’ll not be charged any interest on the 40% equity loan. However, a management fee of £1 a month will apply from the date of purchase.

From year 6, a fee of 1.75% is payable on the equity loan, which rises annually by RPI inflation (retail price index) plus 1%.

There are some restrictions to the scheme as follows:

  • equity loans are available to first time buyers as well as homeowners looking to move
  • the home you want to buy must be newly built with a price of up to £600,000
  • you won’t be able to sublet this home or enter a part exchange deal on your old home
  • you must not own any other property at the time you buy your new home with a help to buy. This includes if you have a financial interest in another property even if you do not live there. If you are married then this includes property owned by your spouse

Rent plus

Rent plus properties are managed by housing associations. Tenants are given 5 year renewable tenancy agreements set an affordable rent of 80% of market rent including service charges.

At the end of the 5 year period the tenant will be invited to purchase the property. The idea is that the scheme gives you time to save up the deposit and money to buy the property.

Those who do purchase the property will received a gifted deposit of 10% of the property’s market value. If after 5 years you can’t afford to purchase the property your tenancy agreement can be renewed for another 5 years. You have up to 20 years to buy the property.

Hackney Sales

Hackney Sales sells properties built by the Council as part of our house building programme. Hackney Sales is not-for-profit. All money raised will go directly into funding new social housing for local people.

They offer brand new homes on our housing estates for both shared ownership and outright sale.

Homes for Londoners

The Mayor of London has secured over £4.8 billion in government funding to build 116,000 genuinely affordable homes by 2022.

As well as providing homes based on social rent or London living rent, a large number will be shared ownership for people who want to buy but can’t afford to do so on the open market.

For those who want to buy – the mayor of London offers properties via 3 options:

  • shared ownership
  • help to buy
  • first dibs

Find out more and register on Homes for Londoners.

Page updated on: 17 February 2020

Housing Options and Advice

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E8 1DY

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