Discounted Market Sale homes
A genuinely affordable home
In 2018 the Institute for Fiscal Studies’ (IFS’s) briefing note ‘The decline of homeownership among young adults’ showed that home ownership among young adults has collapsed over the past 20 years – particularly for those on middle incomes. In 1995-96, 65% of people aged 25 to 34 with incomes in the middle 20% for their age owned their own home. Today, twenty years later, that figure is just 27%. The root-causes are both the chronic lack of housing and flat wage growth in recent years, which as a result has left thousands – especially those on middle or low incomes priced out of ever being able to call a home their own.
Homes are simply not affordable anymore as the sharp rise in house prices relative to incomes shows. After adjusting for inflation, the average (mean) UK house price was 152% higher in 2015-16 than 20 years earlier. By contrast, the average net family income of those aged 25 to 34 grew by only 22% in real terms over the same period.
These figures are a stark reminder of the challenges being faced by many today who, through no fault of their own, are increasingly seeing the first rungs of the housing ladder being pulled further and further out of their reach. All is not lost though, as there are ways that master planners, housebuilders and Councils can work together to enable more people (especially those on middle incomes) into genuinely more affordable homeownership.
At innerspace one of our core beliefs is in home ownership and we do as much as we possibly can to enable better more sustainable homes for people to own. A house is not only a stable place to put down roots and call a home, but it’s a family’s biggest most tax efficient asset, can act as a pension pot and gives security of shelter in retirement and a nest egg for children. That’s why in an age riddled with affordability issues, innerspace is offering a Discounted Market Sale model wherever it is supported by councils, to enable more people to enjoy all the benefits that come with owning your own home.
Ok, so what exactly is a Discounted Market Sale home
Discount Market Sale (DMS) – is an affordable ownership product aimed at helping first time buyers and middle-income earners get onto the property ladder by enabling them to buy a home at a discount to market value. The homeowner is not required to pay back the discounted amount at any stage of homeownership and the discount remains with the property (technically the council own the discount) into perpetuity – meaning these homes will stay permanently affordable. The local council participates in collaboration with the developer to offer properties for sale to eligible purchasers at a discounted price which is a minimum of 20% – but may be as high as 50%. For example, a £300,000 house with a 25% discount would be offered to eligible applicants for £225,000. This is a great way to make home ownership not only more permanently accessible to first time buyers, but also help upscalers who may not normally be able to move to a larger home to accommodate growing space needs.
Please refer to Chart A) showing how under a Discounted Market Sale Model, applicants can afford to buy a larger home than they would otherwise not be able to afford either on the open market or under shared ownership.
This is not a shared ownership scheme and even though there is a discount on the sale price, the purchaser still owns 100% of the property. As a result, the purchaser does not rent any share of the property and is not subject to any rental payments in addition to their mortgage charges. This provides an advantage over shared ownership in that as no rent is payable, the monthly housing costs are in most cases significantly lower than shared ownership.
Please refer to Monthly Housing Costs Charts B & C for comparison
Chart B) Shared ownership model
Chart C) Discounted Market Sale model
Sounds too good to be true, so what’s the catch?
Because we have made it more affordable for you to buy, when you want to sell your house, you must do so on the same terms, which means you must sell it with the same level of discount you received and to someone who meets the eligibility criteria, a restriction is normally placed on the property’s Title to ensure that the property remains at that discounted rate permanently.
To be eligible to purchase a Discounted Market Sale home, incoming purchasers are also required to meet certain eligibility criteria set out by the Council, these normally include but are not limited to;
Not having an interest in another property
Being a resident or be employed within the local authority operating the scheme
Qualify against income thresholds
Do innerspace have any locations offering DMS homes and can I register my details on a waiting list for a DMS home in my area.
We currently have one site seeking planning permission for c75 homes in Langford, Bedfordshire of which we will be asking the council for over 50% of these to be offered under our Discounted Market Sale model. Feel free to get in touch through our website to find out more and to keep up to date with this development. As you would expect, there is anticipated to be a high level of demand for our Discounted Market Sale homes at Langford, so we would advise registering your interest as soon as possible through the innerspace website as they will be allocated on a first come/first served basis.
If we don’t have any available Discounted Market Sale homes in your area, we would strongly recommend registering your interest in our DMS homes and list your area of interest through our website, that way you can be the first to be notified when we have availability. A further reason to register your interest is that if we receive a significant number of enquiries for certain location, then we will go out of our way to locate developable land to bring forward Discounted Market Sale homes to our waiting list.
I’m in, and would like to know more please
We want to make sure you have a great, easy and supported experience when buying your first Discounted Market Sale home with innerspace, so we’ll be here with you every step of the way. Besides registering your interest, you can always request our Step by Step guide to purchasing and owning a Discounted Market Sale home or just get in touch with any queries you may have. We are always here to help demystify the process and get you owning your own home.