Guide to Affordable Housing in London

With house prices and rental costs in the capital continuing to challenge affordability, many Londoners are exploring the different types of affordable housing available. Whether you're looking to rent or get on the property ladder, there are a number of housing schemes in London designed to help people on a range of incomes.

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 a government-backed scheme aimed at helping renters transition into homeownership. It works by homes being offered at intermediate rent levels, typically set at two-thirds of local market rent, making it easier for tenants to save for a deposit.

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, often 20 to 50%. 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 (typically 25%–75%) of a property using a specialist interest-only mortgage, with the remainder rented from a housing association.

HOLD is a government-backed scheme that enables people with long-term disabilities to buy a home from the open market, especially where Shared Ownership developments aren't available. It provides greater flexibility in choosing a suitable home, potentially closer to family and support networks.

Key features of HOLD:

Purchase a share of a property with rent paid on the rest
Select a home from the open market (with housing association approval)
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 25% 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.

Homeowner in Shared Ownership apartment in Macfarlane Place