Affordable housing offers homes that are available to buy or to rent for people whose needs are not met by the housing market.
It includes housing that provides a subsidised route to home ownership through schemes like Shared Ownership or First Homes - which is designed to help essential local workers climb onto the property ladder.
And it includes social and affordable renting that’s run through local councils and housing associations.
You can apply for affordable renting directly through multiple housing associations or through your local council.
Let’s take a look at affordable housing.
What is the First Homes scheme?
First Homes launched in 2021 to help local first-time buyers and key workers onto the property ladder by offering new-build homes at a 30% - 50% discount.
The reduced rates will apply to the homes forever, meaning that buyers on a low income will continue to benefit every time the property is sold.
The government has pledged a further 10,000 properties will be added to the First Homes scheme every year.
How do I qualify for the First Homes scheme?
You must be a first time buyer aged 18 or over. That means that anyone who has ever inherited or been gifted a home is ineligible.
You must earn less than £80,000 (or £90,000 in London), whether you're buying solo or as part of a couple.
You must be able to get a mortgage for at least half the price of the home
The property you’re buying must cost no more than £250,000 or £420,000 in London.
You must already work or live in the area you’re wanting to buy in, or have a connection to it. Say you grew up there or have family there, for example.
Key workers will be prioritised.
How do I apply for the First Homes scheme?
First Homes will be offered on a limited number of plots in most new developments once the scheme is fully up and running.
You’ll need to check whether the builder is currently including First Homes as part of the development.
If yes, you must qualify through the eligibility criteria and apply through the builder.
Which builders offer the First Homes scheme?
Several builders are currently taking part in the scheme, including:
And the HomeOwners Alliance will let you know when new First Homes developments are announced through their newsletter.
Mortgages for First Homes
A number of major high-street lenders including Lloyds, Halifax and Nationwide Building Society are offering mortgages for First Homes, while local building societies are offering 95% loan-to-value mortgages for the scheme.
Chorley Building Society
Darlington Building Society
Leeds Building Society
Mansfield Building Society
Nationwide Building Society
Newcastle Building Society
With Shared Ownership, you only pay the deposit on - and need a mortgage for - the share of the property you're buying.
That means the amount of money needed for the deposit is a lot lower than it would be if you were buying the whole property outright.
The share you can buy is usually between 25% and 75% of the total property, but with some homes, it can be as little as 10%.
You pay a mortgage on the share you own, and reduced rent on the portion you don’t own.
That part is usually owned by a housing association, private developer or local authority.
As time goes on, you can increase your share in the property by buying more of it in increments, until you own all of it outright or are ready to sell it.
How do I qualify for Shared Ownership?
The Shared Ownership scheme used to be focused on public-sector workers such as nurses and teachers. But provided you meet the following criteria, these days, anyone can apply:
You must be at least 18 years old
You’re a first-time buyer or are currently in the process of selling your own property
You have a household income of less than £80,000 a year, or up to £90,000 in London
Buying a home on the open market is unaffordable for you
You meet the mortgage affordability criteria
You can afford the costs involved (including rent on the portion you don't own, ground rent and service charges)
If you’re aged 55 or over, you may qualify for Older People’s Shared Ownership.
It's similar to the standard scheme, but you’re only able to buy up to 75% of the property.
Once you own this proportion, you won’t need to pay any rent.
Rent to Buy
Rent to Buy is a government scheme designed to help renters to save up money towards a deposit to buy their first home.
With rent to buy, people are able to rent a new-build home at around 20% below its market value, the idea being that they can put that 20% saving towards a deposit.
The scheme lasts for up to 5 years and during that time you have the option to buy the property or a part of the property through the Shared Ownership scheme.
If you haven’t saved up enough money to buy it during that time, you’ll need to move out at the end of the 5 years.
Different housing associations use different names, such as Try Before You Buy, Rent Save Buy, Rent to Own, Intermediate Market Rent and more. So, check the terms of what you are being offered before signing up.
Rent to Own
Rent to Own is slightly different.
With Rent to Own, you’ll rent your property at the full market rate for five years.
Between the end of the second and fifth years, you have the option to buy your home.
If you do, you’ll receive 25% of the rent you’ve paid back, plus 50% of any increase in the property’s market value.
You can then use that as a deposit to buy the home.
How do I qualify for Rent to Buy?
You must be a first-time buyer or unable to afford a home on the open market
Your household must earn £60,000 a year or less
You must have a good credit history
Beyond this, different housing associations have different qualifying criteria and priority is often given to existing housing association or council tenants.
How do I apply for Rent to Buy?
If you are interested in Rent to Buy, you should contact housing associations in your local area to see if they have any available schemes.
In the capital, the Greater London Authority operates a Rent to Buy scheme called the London Living Rent.
Which housing associations are taking part in Rent to Buy?
Some of the associations taking part in the scheme include:
You can find out which housing associations are taking part in Rent to Buy by contacting your local authority or local housing associations near you.
Affordable homes for rent
There are 2 types of affordable homes for renters: social and affordable rent.
The most common type of social housing is social rented homes, where rents are charged at around 50% of the local market rates.
Affordable rented homes are also available, where tenants are charged around 80% of the local market rent or even lower.
What is social Rent?
Social rent is a government-subsidised rent for people on low incomes. It can also be referred to as ‘fair rent’.
Social rent is usually paid to registered providers and local authorities by the renter. It is a low cost rent that is set by a government formula, where rent rises are capped.
This means it is significantly lower than the rent a tenant would pay in the normal market.
Social rented homes are let through your local authority’s housing register.
You can apply for social rent through your local council.
But not everyone is eligible for social housing, so the next best alternative could be to aim for a provider that charges ‘affordable rent’.
What is affordable rent?
Affordable rent homes are let at below the market rate by a registered provider.
Affordable rents were introduced by the government to allow social housing providers to charge up to 80% of the local market rent for the homes they let.
That said, many base their affordable rent policy on local earnings, rather than a percentage of the market, which often means that the rent is considerably lower than an 80% share of the local market.
Affordable rented homes are usually let to people on a low incomes or who need extra support.
How do I apply for an affordable rent home?
Affordable rented homes are let through the local authority housing register in the same way as social rented homes and through individual housing associations.
You can apply:
directly to a housing association
and through your local council
You can apply to more than one housing association at a time.
Once you apply, you’ll be put on a waiting list.
Housing associations normally offer housing to people most suited to that particular property.
Unfortunately, you may have to wait a long time for a suitable property to become available.