Guide to Affordable Housing in London

Our guide breaks down the most common types of affordable housing programs in London, helping you navigate your options and understand better the differences between the rental options in London, Shared Ownership, and other government-backed schemes.

Social Rent

Social rent is one of the most affordable housing options available in London. Typically managed by housing associations or local councils, social rented homes are offered at subsidised rents, often set at around 50% of market rates. Eligibility is based on local need, income, and housing circumstances.

Social housing is always in high demand, and waiting lists can be very long ( over two-years for a one-bed flat ). However, for those in greatest need such as low-income families, vulnerable individuals, or those in overcrowded housing, it provides secure long-term accommodation.

One of the key advantages of social rent is the security it offers compared to private renting. Tenants can usually receive long-term or even lifetime tenancies, giving them greater peace of mind and stability in their housing situation. This can be especially important for families with children or individuals with health needs, as it allows them to build roots in a community without the constant worry of rising rents or eviction.

London Living Rent

London Living Rent is an affordable rental scheme supported by the Mayor of London, designed to help Londoners save towards buying a home.

It offers intermediate rent homes with rents set according to local household incomes. It is usually based on around a third of average earnings in the area.

To be eligible, you must:

Live or work in London
Have a maximum household income of £75,000
Be unable to buy a home on the open market
Not currently own a property

This scheme is particularly beneficial for young professionals and key workers saving for their first home.

The living area at a new 1 bedroom apartment

Discount Market Sale

Discount Market Sale (DMS) is a low-cost homeownership scheme where properties are sold at a permanent discount to market value, of at least 20%.

The key benefit is significant savings for those that would not otherwise be able to buy a home outright.

Eligibility usually requires:

Living or working in the borough of the property
A maximum income cap
Not owning another property

DMS homes are often offered through local authority partnerships with housing developers. When you come to sell the home, the same discount will apply to the new owner so that the property is kept affordable.

First Homes Scheme

The First Homes Scheme is a similar government initiative offering new-build homes to first-time buyers at a discount of at least 30% compared to market value. The main difference to DMS is that the First Home Scheme is focused on first-time buyers. These homes must be your main residence, and the discount is locked into the home for future resales.

To qualify:

You must be a first-time buyer
Household income must not exceed £80,000 (£90,000 in London)
Purchase price must be below £420,000 in London after the discount

This scheme is designed to help local key workers and first-time buyers stay in their communities.

Couple Meeting Financial Advisor on What types of mortgages

HOLD Scheme

If you have a disability and rely on benefits, homeownership may still be within reach through Shared Ownership or the HOLD scheme (Home Ownership for people with Long-term Disabilities).

Both options allow eligible individuals to buy a share (usually from 10%–75%) of a property using a specialist interest-only mortgage, with the remainder rented from a housing association.

Eligibility and funding options can vary, so applicants may need to show that the home is suitable for their needs, that they meet affordability requirements, and that a housing association is able to support the purchase.

Some buyers might also be able to access Support for Mortgage Interest.

Key features of HOLD:

Purchase a share of a property with rent paid on the rest
May allow you to choose a property from the open market, subject to housing association approval
It’s designed for people with long-term disabilities who cannot find a suitable home through standard Shared Ownership
Mortgage interest payments may be covered by a government SMI (Support for Mortgage Interest) loan

This approach offers an accessible path to homeownership for disabled individuals, blending independence with support.

Shared Ownership

Shared Ownership allows you to buy a share (usually between 10% and 75%) of a property and pay a reduced rent on the remaining share. Over time, you can staircase, which means to buy additional shares until you own 100%.

This is a great way to get on the property ladder with a smaller deposit and lower monthly costs compared to full ownership. Shared Ownership homes are usually newly built or resold by housing associations. There is eligibility criteria which you will need to meet, as it is designed for those who cannot afford to buy a home outright.

Peabody has a range of Shared Ownership homes available across the capital, from Dagenham to Chelsea. You can use our home finder tool to search for your ideal Shared Ownership home.

If you buy with Peabody, you will become a leaseholder of the property - usually with a 250 to 999-year lease agreement - offering significant security. For the remaining share that you don't own, you'll pay rent at a set below-market rate.

Frequently asked questions about affordable housing in London

To qualify for London Living Rent, applicants must:

Live or work in London
Have a household income under £75,000
Be unable to buy a property on the open market
Not already own a home

It’s designed for renters who want to save towards buying a home while paying an intermediate rent that is linked to local incomes and therefore usually below market levels.

Shared Ownership allows you to: