Low Cost Housing

These schemes usually have strict eligibility criteria, such as:

• You must be considered to be in need of assistance in purchasing a property. In other words, you must be able to afford to buy it at the discounted price but not at full market value. Usually a check will take place that involves assessing how much deposit you have, how much a bank will lend you, and your household income.
• There must be a connection to the local area – for example, you live or work there or have family living there.
• You must not own any other property. The scheme isn’t reserved exclusively for first time buyers, however. It can also apply to those who are selling their current home due to a change of circumstances and need somewhere to live.

Each local authority can set different criteria, so don’t take the above as gospel. This might be right for one area but not for another, so always check the criteria for your local area. Local councils will probably have a page on their website, like this one for Chorley in Lancashire, to give more information.

Properties on this type of scheme are sold through estate agents like any other. The advertisement should state that it is being sold via a low cost affordable housing scheme.

If you see one you like, you need to apply to the local authority so they can check your eligibility. Then, once you are approved, apply for a mortgage.

Some banks won’t give you a mortgage for these types of property. They don’t like the fact that if the property is sold in the future, the price must be below market value. Lenders need the ability to recoup as much money as possible if they have to repossess the property and sell it, so they can get their money back. They don’t want to be restricted in terms of who they can sell the property to.

There are still some lenders who will consider these properties, however. In the event that you stop making your repayment and the bank repossesses you, the terms and conditions of the scheme have to permit the bank to sell the property at full price to anybody. You won’t be able to get a mortgage on the property if this clause isn’t there.

Your home in the future

Pros and cons of Low Cost Housing

Pros

• You can get a house for less money
• Strict criteria means there is less competition
• Gets you on the ladder if you can’t afford a property at full market value

• Strict criteria means you may not qualify
• Limited availability of houses
• You’ll have to sell at a discounted price in the future
• A limited number of banks and building societies will consider lending on these types of property