When a developer gets planning permission in Cornwall, they are often required to provide affordable housing for sale. They can provide homes themselves as discounted homes. This scheme is known as Section 106 Discounted Market Sale.
How does discounted sale work?
- The original developer will be obligated to sell a certain number of homes on their development at a discount to people with a local connection who are in housing need. The Council will make sure that a legal agreement is in place (this is called a Section 106 agreement).
- The sale price can vary anywhere between 80% and 50% of open market value.
- When the property comes to be sold, the developer or owner will have a valuation carried out by a Royal Institute of Chartered Surveyors (RICS) qualified surveyor and the Council check this and agree a sale price.
- The Council will ask the developer or owner to advertise locally
- The proposed buyer of the property will be assessed by the Council to make sure they are eligible. The approved buyer will then be bound by all the legal obligations in the section 106 agreement.
Example of a purchase with a low cost home for sale
- Open market value of the property: £200,000
- Discount the developer has to offer: 50%
- Discounted purchase price (funded by your mortgage and cash deposit): £100,000
- When you wanted to sell the property the same discount applies.
Am I eligible?
In general, most schemes have the same eligibility criteria, as follows
- your household earns £80,000 a year or less
- you have a local connection to the parish or town where the property is
- 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. For example relationship breakdown forcing the sale of your property and you can't afford to buy one on the open market. In these cases the property must have a memorandum of sale in order for us to consider you.
Where there is more demand than supply and where the Council have nomination rights, priority is given to certain households. Priority may differ slightly for Government backed schemes and schemes subject to the Council’s Affordable Homeownership Policy.
What is a housing need?
Housing Need means that in the Council's opinion you are living in insecure or unsuitable accommodation and can't afford to buy something suitable on the open market.
What is a local connection?
The Section 106 agreement will set out the local connection criteria. This usually means that for a certain period of time you have to have lived or worked permanently in the parish or town where the property is located, or that you used to live there or that you have close family who have lived there and are in need of support.
Where can I find discounted sale properties advertised?
Developers and owners of discounted sale properties being re-sold advertise their homes using estate agents and property websites such as Rightmove/Zoopla. New build properties may also be advertised in their sales offices or on the developer's website as well as local advertising on social media, local newsletters etc.
