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Low and reduced cost home ownership schemes

This content applies to England

Schemes offered by private registered providers of social housing (PRPSHs) that allow tenants to purchase property at a discount.

Shared ownership

Shared ownership is a form of home ownership designed for people who want to buy a home but cannot afford to make the full mortgage repayments. Priority is often given either to existing PRPSH or local authority tenants, or to those on their waiting lists. Through shared ownership, the applicant is able to buy a share of the property and pay rent to the PRPSH for the remainder. The initial share is normally between 25 and 75 per cent (for which the applicant would need to raise a mortgage in the normal way). In most schemes the applicant can gradually increase (or 'staircase') this share to 99 or 100 per cent, in which case the original shared ownership purchase converts to outright ownership by leasehold or freehold.

The rent payable (which is eligible for housing benefit, if necessary) reduces as the purchased percentage grows. The occupier can sell their percentage of the property, but must inform the PRPSH. The lease usually restricts who the property can be sold to, so that potential purchasers are from priority groups.

In addition to making the rent and mortgage payments, the applicant is responsible for most of the normal costs of home ownership. If the property is a house, the owner is responsible for maintenance, and there is often also a service charge to cover property insurance, rent collection, and other services provided by the PRPSH. If it is a flat, external maintenance and other costs remain the responsibility of the PRPSH, but will be met in part by a further service charge.

Selected PRPSHs in England and Wales operate the HomeBuy shared ownership scheme (since replaced with Help to Buy shared ownership), which replaced Do It Yourself Shared Ownership (DIYSO) and the Tenants' Incentive Scheme.

See Shared/low-cost home ownership for more information on shared ownership and other low cost home ownership.

Right to buy

The right to buy scheme generally only applies to local authority tenants. It is also available to tenants who were secure council tenants for the qualifying period, but who have become PRPSH tenants as a result of a Large Scale Voluntary Transfer. This is known as the 'preserved right to buy'. Tenants must also have lived in the property for a certain period of time to qualify for the right to buy – see Buying LA and PRPSH housing for more information.

Right to acquire

Certain PRPSH tenants have the right to buy the home they currently rent: this is known as the right to acquire. To be eligible for the scheme, the tenant must be a PRPSH tenant living in a property that was built or bought (by the PRPSH) after 1 April 1997 using Social Housing Grant funds. The tenant must have been housed by a PRPSH or local authority for at least two years if they moved in before 18 January 2005, or five years if they moved in on or after that date. As with the right to buy, the right to acquire includes a discount on the purchase price. The discount is likely to be smaller than those offered under the Right to Buy.

Voluntary purchase

Some PRPSHs offer their tenants the opportunity to buy the property they are currently renting at a discounted price. The scheme is voluntary and not all PRPSHs operate it. Some PRPSHs only include certain properties in the scheme, in which case a tenant can sometimes buy a qualifying property even if they live in another non-qualifying property.

Improvement for sale

Some PRPSHs obtain funds to improve properties in poor condition, and then sell them on at the unimproved value.

Leasehold Housing for Older People/Older People's Shared Ownership

This enables older people to buy a sheltered home on a shared ownership basis. The share purchased can be as little as 25 per cent, and cannot exceed 75 per cent.

Key Worker Living programme

This scheme is no longer operational.

Intermediate Market Rent and Rent to HomeBuy

Many PRPSHs let properties to tenants through the intermediate market rent (IMR) scheme and offer an option to buy a share in the property on a New Build HomeBuy (now Help to Buy shared ownership) basis at a later date.

Some PRPSHs may ask IMR applicants to agree to purchase the property after a pre-defined period. This is called Rent to HomeBuy.

More information on the Rent to HomeBuy (now Rent to Buy) scheme is available from  Capital Funding Guide and  Local HomeBuy Agents.

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