How the Discount Market Sale Helps Buy Affordable Housing in London

If you live or work in East London, owning a home is simply out of reach. The Discount Market Sale (DMS) scheme exists to fix this problem. It lets eligible buyers across London purchase a home at 20% to 30% below market value. 

The need for schemes like DMS becomes clear when you look at local property prices. The average property price in Regbridge is £507,000. A typical first-time buyer is paying £437,000 even after searching for the most affordable options (ONS). That means the average resident needs nearly 12 years of gross salary just to afford a home at full market value with an average income of £41,600. 

Speaking with experienced local estate agents in Ilford can also help uncover suitable properties and schemes in the area. Let’s see how DMS can help you find affordable housing in London. 

What Is A Discount Market Sale (DMS) And How It Works?

The Discount Market Sale Scheme, also known as Council Shared Equity or Reduced Market Value Scheme, is a government-backed affordable housing product. It allows eligible buyers to purchase a new-build home or resale property at a fixed discount below its market value.  The scheme is delivered through a legal agreement called Section 106, which is attached to the planning permission of the development. 

Hence, the local councils, such as in East London, ensure that a portion of new housing schemes remain affordable to first-time buyers or others. 

How Much Discount Will I Get in DMS

The discount is typically between 20% to 30%, or may reach to 50% depending on the local council policy. Unlike Shared Ownership, DMS gives you a full 100% ownership from the start you complete. The discount is not a loan you repay. It is a legal restriction registered on the property title. 

It means the discount stays attached to the home, and every buyer in the future also benefits from the same reduced price. 

Difference Between DMS and Shared Ownership

In shared ownership, you buy a percentage share of the property and pay rent on the rest. The Discount Market Sale scheme provides you with full ownership at a discounted rate. There are some major differences between them as follows:

For buyers who want to own their home urgently and avoid ongoing rent payments, DMS is often a stronger option, especially in high-value areas like Ilford. 

Why Does The DMS Scheme Matter In Ilford Specifically?

Ilford sits at a unique location, and it’s one of East London’s most well-connected towns, but it is still affordable compared to the Central London Boroughs. The Elizabeth Line now puts Canary Wharf within 12 minutes, Liverpool Street within 18 minutes, and Heathrow within 40 minutes. 

The ongoing development in the Ilford town centre and significant investment in the Ilford Area increase the property demand. But that demand has pushed prices high in East London. The property and income ratio in East London looks like:

At 20% discount, a £437,000 home price will drop to approximately £350,000. At 30%, it falls to around £306,000. The savings will be between £87,000 and £131,000.  It is enough to afford their own homes for thousands of Ilford residents.

DMS Scheme is Suitable for?

The Scheme is particularly relevant for:

• First-time Buyers who struggle to afford open-market homes in  IG1, IG2, IG3 and IG4 postcodes (East London).
• Families with a local connection to Redbridge/Ilford who need more space but cannot stretch to full market prices.
• Young professionals who use the Elizabeth Line and want to own a house, not rent in East London. 

Am I Eligible for the Discount Market Sale Scheme?

Eligibility for the Discounted Market Sale Scheme is set by local authorities. However, the general criteria across London are as follows:

• Location: You will need to work or live in the borough of development.
• Local Connection Evidence:  Some councils explicitly require proof of residence or permanent employment where discounted homes are listed. 
• Ownership Restriction: Not currently owning the property in the UK or outside. 
• Income Cap: The income must not exceed 45% of the Discounted Market Sale Price of that property. Nationally, this is set at £80,000 or 45% of the discounted sale price, whichever is lower, and is prioritised. 
• Age: 18 years old with the right to reside in the UK 
• Deposit: You will need a deposit of 5% of the discounted value. 
• You are not able to buy a property in the borough on open market rate
• Some councils allow 100% cash purchase for people over 55 years, if they can prove that they are unable to buy property at open market value. 

Note: 

You don’t have to be a first-time buyer to qualify for the DMS scheme. You can have previously owned a property, but at the time of purchase, you must not have owned the property. 

How to Apply for the Discount Market Sale Scheme?

The DMS scheme follows a simple process:

1. The developers set aside a fixed number of homes during planning and local housing councils, and developers agree on the number of homes sold under the Discount Market Sale Scheme.
2. Buyers apply through their local councils and check what homes are available at discounted prices.
3. If you meet the local council eligibility criteria, you get accepted, and you can buy a home at the set reduced market 100%price.

Can You Get a Mortgage on a DMS Property?  

The DMS scheme purchase requires a deposit of at least 5% of the purchase price. The buyer must arrange a mortgage for the discount purchase price homes. It is advisable to consult with a mortgage adviser, as not every lender is aware of DMS. 

 There are some conditions to secure a mortgage:

• You own the whole property, not a share.
• The mortgage is secured against the full ownership at the reduced market value.
• You will be responsible for paying council tax, mortgage and all essential household expenses.

Restrictions after Buying Discount Market Sale Homes

There are some rules or restrictions when you buy discounted homes:

• Home is intended to be used as a sole residence.
• The DMS home can’t be used for buy-to-let investments, second homes or holiday lets. 
• If you carry improvement in the house that adds value to the property, at the time of sale, there might be some rules to consider them.

These restrictions are legally binding, and all the requirement to sell the property are written in the deeds of the property.

How to Sell DMS Property in the Future?

When you want to sell the property, you can’t list it directly on the open market. You must:

1. Notify your local council or housing authority.
2. The councils are allowed to find a new eligible buyer in a period of  8 to 12 weeks.
3. The property is sold at the same discount rate you purchased on. 

Disclaimer: 

Discount Market Sale scheme rules, income caps, and property availability are subject to change. Always verify current eligibility criteria with the Local Council or the relevant developer before proceeding with a purchase. 

Pros and Cons of Buying A House Through a Discount Market Scheme

Like all other affordable housing schemes, DMS has genuine advantages and real limitations. 

How to Find DMS Properties in East London or Ilford?

You can look for the Discount Market Sale Scheme on your local council website, such as Redbridge Council in the case of Ilford. You can contact them to know if any developments have been made under the DMS scheme in your local area. 

Our team works with buyers across Ilford (East London) and the wider Redbridge area every day. We know which developments have DMS homes, and our estate agents may have details about new deals. 

Get in touch today to find out what homes are currently available in your area.