Discounted Market Value

This is where a property will be sold at a discounted rate below the open market value.  For example a property valued at £120,000 is offered for sale at a 30% discount: £84,000.  Ownership is 100%.  There are restrictions on the resale of the property in future.  A legal covenant is in place to ensure the property can only be resold at a 30% discounted value.

Low Cost Home Ownership (LCHO) Key Considerations:

LCHO is an excellent way of getting onto the property ladder.  Different types of LCHO suit people in different situations and it is important to consider your options carefully before making purchase to ensure you choose a model that suits your financial situation and households needs.  The value of property can go down as well as up and you may lose your home if you cannot keep up with the mortgage repayments.

All forms of LCHO involve a range of additional costs:

• Legal fees to carry out the purchase (conveyance)
• Survey fees
• A deposit, usually a minimum 5%
•  Mortgage arrangement fees

Once purchased there are costs associated with:

• Mortgage repayment
• Insurances including buildings insurance and usually life insurance
•  Repairs and Maintenance costs
• The usual range of household expenses such as fuel, council tax

Some LCHO schemes may have service charges associated with the accommodation (eg for maintaining any communal areas)