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Discounted sale

When a developer secures planning permission in Cornwall, they are often required to provide affordable housing for sale. They can provide homes themselves as discounted homes for sale.

How does discounted sale work?

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  • The developer will build some of his standard open market houses but the legal agreement (called a section 106 agreement) which accompanies the planning permission requires the developer to sell the homes at a discount.
  • In older agreements, the level of discount will vary anywhere between 80% and 50% of open market value.
  • The developer will have a valuation carried out on the completed home and confirm the discounted selling price based on the legal agreement.
  • When you have bought your home, you become the owner and will be bound by all the legal obligations in the section 106 agreement.
  • When you decide to sell your home, the section 106 agreement will normally require you to sell your home to a local person in housing need at the same percentage discount.
  • If the value of your property has risen, you will benefit by the same percentage.

Example of a purchase with a low cost home for sale

  • Open market value of a new home: £200,000
  • Percentage the developer is required to sell: 50%
  • Discounted purchase price (funded by your mortgage and cash deposit): £100,000 

When you wanted to move, if your home was valued at £260,000, you would be required to sell it for £130,000 and you would get £130,000. You would need to pay off your mortgage with your share of the money.

In general, all schemes have the same eligibility criteria.  You can be considered for schemes in Cornwall if your household (NB 'household' is the number of people who are buying the home. For example, a household might be you alone or you and your partner)

  • your household earns £80,000 a year or less
  • you can’t otherwise afford to purchase an open market home suitable to meet your needs in your area
  • You are a first-time buyer (you are a first-time buyer if you haven’t owned a home before) or
  • You used to own a home, but can't afford to buy one now 
    In some cases existing home owners will be considered, if they are in housing need

Where there is more demand than supply, priority will be given to certain households.  Priority may differ slightly for Government backed schemes and schemes subject to the Council’s eligibility policy. To be eligible for schemes in Cornwall (other than government backed equity loan schemes), you will need to meet the local connection criteria and also be a person in housing need.

"Housing Need" means being homeless or threatened with homelessness or living in accommodation which in the opinion of the Council is Insecure or unsuitable and being unable to purchase or rent reasonably suitable accommodation in the open market for property in the locality where the Affordable Dwelling is situated taking into account the person’s income and capital and other financial circumstances. Accommodation may be unsuitable on the grounds of cost overcrowding unfitness or lack of basic amenities or because of a person’s infirmity physical disability mental disability or specific social or care needs;

The local connection criteria is defined within the Section 106 legal agreement which accompanies the planning approval.  Historical S106 Agreements can vary in their definition of Local Connection so it is critical to always look at the agreement that relates to your specific property if there is one.  Where there is no s106 agreement or if the s106 agreement does not contain Local Connection criteria priority will be given (under the Council’s eligibility policy) as if the Council’s local connection criteria were in place.