Low Cost Home Ownership

What is Low Cost Home Ownership?

Local Authorities have a duty to help people who need a home, but a chronic shortage of social housing has led to some innovative thinking.   One such scheme is called “Low Cost Home Ownership”.  If you qualify, you’ll be able to purchase a house for 80% of its market value.  But there is a catch – when you come to move on, you’ll have to sell it to somebody else who qualifies for 80% of the market value at the time of the sale.  This ensures that there are affordable homes in the area in the future.

How do I know if I qualify?

You will have been referred to the sales office of a new build site by the Housing Department of your Local Authority.  The Local Authority will look at a number of factors;  there may have been a change in your marital status, you might have a disability and currently be in unsuitable accommodation or you might be living in an overcrowded property at the moment.  If you think you may qualify for Low Cost Home Ownership, you should discuss this with your Local Authority.

If your circumstances qualify you for the scheme you will still have to secure a mortgage and pay all of the legal fees associated with the property.

What is a “Golden Share”?

In certain circumstances the Scottish Government, who finance the scheme, may keep a 20% stake in the property.  This is called a “golden share” and means that why you come to sell, the Scottish Government retain the right to buy the property from you.

What’s the different between “low cost home ownership” and “shared equity”?

With low cost home ownership, you own the property outright, with a legal contract covering the “golden share”.  With “shared equity”, you share ownership with a housing association, a local authority or the government.  When you sell the property, you get 80% of the sale price and the shared equity holder gets the other 20%.  This means that both parties share the risk of the property price falling, but also the rewards if the property price increases.