What is the Discount Market Sale Scheme?

Key takeaways

Discount Market Sale (DMS) lets eligible local buyers purchase new-build homes at a fixed discount (usually 20–30%, sometimes up to 50%) from full market value; you own 100% but must live there and can’t let it out without permission.
Eligibility is set by local councils and often includes being a first-time buyer (or not currently an owner), having a local connection, meeting income caps, and proving you need help to buy; some priority goes to key workers.
The discount is permanent and tied to the property: on resale you must sell to another eligible buyer at the same percentage discount; some areas allow open-market sale if no buyer is found within a set window, with the discount repaid.
Pros: lower purchase price, smaller deposit and mortgage, full ownership, and long-term affordability for locals. Cons: restricted lender choice, resale at a discount, rules on improvements/letting, fewer home options, and strict criteria for all buyers on the application.

The Discount Market Sale (DMS) scheme is a way to help people buy a home at a lower price. The main aim is to make home ownership possible for local residents who find prices in their area too high. The homes are sold at a fixed discount from the full open market value. This discount can be up to 50% in some places. Most commonly, the discount ranges from 20% to 30%.

Local councils and housing developers create the scheme together. They set aside a number of new-build homes on certain developments. Only eligible people can buy them, so the scheme supports those who might be struggling to buy a home otherwise.

The discounted price is not temporary. If you sell the home in the future, you need to sell it to someone who qualifies for the DMS scheme, at the equivalent discounted rate. This keeps the home affordable for the next buyer. You cannot sell the home on the open market for its full value.

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Who Can Apply for the DMS Scheme?

The DMS scheme is only open to certain groups. The rules could differ, depending on where you live and who is offering the scheme. You usually need to:

Be buying your first home, or not currently own another home.
Live or work in the local area.
Need help to buy because you cannot afford a home at full market price.

Some schemes prioritise those working for public services, such as nurses, teachers or police officers. In many cases, your annual household income must fall within set limits. These income caps vary by council, but they aim to help households on middle to lower incomes.

If you own another property, you may need to sell it to join the scheme. Some schemes refuse applications from buy-to-let landlords. You may also need a deposit and mortgage just like with any property purchase.

Most DMS homes are for sale to owner-occupiers. That means you must live in the home yourself and not rent it out.

How Much is the Discount?

The discount depends on the scheme and the area. Local councils set the size of the discount, often based on what first-time buyers can typically afford.

Most schemes offer a discount between 20% and 30% off the full price.
Some areas, especially where property prices are very high, might offer up to 50% discount.

If the full value of a flat is £300,000 and the scheme offers 30% off, you could buy it for £210,000. You would then need a mortgage and deposit based on this reduced amount.

The actual discount stays attached to the property when you move. If you got a 30% discount when you bought, you will need to sell the home in future with the same discount applied to the value at that time.

How Does the DMS Scheme Work?

The scheme follows a simple but strict process.

Developers set aside homes: During planning, local councils and housing developers agree how many homes will be sold under DMS. These are usually new-build flats or houses.
Buyers apply through the council or developer: You need to check what homes are available and apply, showing you fit the criteria.
Discounted purchase: If you are accepted, you buy the home at the set discounted price. You still need a mortgage and deposit for the discounted amount.
Living in the home: You must live in the home yourself. You cannot let out the property without permission.
Future sales: If you wish to sell, the process repeats. You must sell to someone who qualifies, and the new sale is at the same percentage discount as when you bought.

This approach keeps the homes affordable over many years. The benefit is passed from one local buyer to the next.

How is Eligibility Checked?

You usually fill out an application form with details about your income, savings, and current housing situation. Some schemes might request payslips or a letter from your employer to prove you live or work nearby. If the council needs more details, they will ask for extra documents.

The main checks include:

Proof of local connection.
Household income within set limits.
No repeated property ownership.
Ability to get a mortgage for the discounted price.

You cannot buy a DMS home if you have the funds to buy a similar home at full market price.

Some schemes add a waiting list. You might need to wait until a suitable home is built or becomes available.

What Sort of Homes are Available?

DMS homes are usually new builds. They are usually part of larger developments where the council asks the developer to make some homes available under DMS rules.

This means the homes are:

Modern and energy efficient.
Usually the same design and finish as full-priced homes in the same development.
Can be apartments or houses, depending on the scheme.

Deposit Requirements and Mortgages

You need a deposit to buy your DMS home, just like with any property purchase. The size of the deposit depends on your lender, but is usually at least 5% of the discounted property price.

You must arrange a mortgage for the discounted purchase price. Not all lenders are familiar with DMS, so it helps to use a mortgage adviser if you are unsure where to start.

Points to note:

You own the home outright, not just a share.
The mortgage is secured against the full ownership of the home, but at the reduced value.
You are responsible for paying the mortgage, council tax and all other household costs.

Restrictions After Buying

When you buy a home through the DMS scheme, there are rules you need to follow:

You must live in the property yourself.
The home cannot be used for buy-to-let.
If you want to sell the home in the future, you must do so through the DMS scheme at the same percentage discount.
If you carry out major home improvements that add value, there might be rules on how that extra value is treated at sale.

These restrictions are legally binding. The discount and the requirement to sell through the scheme are usually written into the title deeds of the property.

Selling Your Home in the Future

When you want to sell your DMS home, you cannot put it straight on the open market. You must:

Notify your local council or housing provider.
Allow them a period of time (often 8 or 12 weeks) to find a new eligible buyer.
Sell at the same percentage discount to that buyer.

If no one qualifies during the time limit, in some places you may be allowed to sell on the open market. But you must then repay the equivalent of the discount you received to the council or scheme provider.

The idea is to keep these homes available to future eligible buyers at an affordable rate.

Example of a DMS Purchase and Sale

Suppose you buy a DMS flat for £210,000. It had a full market price of £300,000. You are getting 30% off.

Ten years later, local property values have increased and the current market value of your home is now £400,000.

You must sell at a 30% discount off the new value:

£400,000 – 30% (£120,000) = £280,000

You sell for £280,000, not the full market value. The next buyer benefits in the same way you did. If you cannot find a qualified buyer, some schemes require repayment of the original discount.

Pros of the Discount Market Sale Scheme

Makes buying a home more realistic for local people.
Reduces the size of your deposit and mortgage.
Gives you full ownership, not shared ownership.
Keeps homes affordable each time they are sold.

You live in the property just like any other homeowner. Decoration, repairs, council tax, or gardens are your own choice and responsibility.

Cons and Things to Watch Out For

You do not get the full open market value if you sell.
Fewer lenders may be willing to offer mortgages on DMS properties.
There may be limits on improvements and extensions.
Most DMS homes are part of new build schemes, so choices are fewer than the main market.
Strict eligibility criteria can exclude some buyers.
If you buy with another person, both must meet the eligibility rules.

You also need to be comfortable with the idea that the home is always discounted. It will never be worth its full market rate.

How to Find DMS Properties

Look for information on your local council’s website. Search for ‘Discount Market Sale’ or ‘affordable home ownership schemes’. Developers will tell buyers which homes are included. Estate agents handling new builds will often have details.

If you are interested, contact the council’s housing team or speak to the sales office on a relevant development. They can tell you current availability and how to apply.

How DMS Compares to Other Affordable Ownership Schemes

It can be confusing to understand all the ways to buy a home at a discount. Here’s how DMS sits alongside other popular schemes.

Shared Ownership

In Shared Ownership, you buy a portion of the home and pay rent on the rest. With DMS, you buy 100% of the home at a discounted price.

First Homes

The First Homes scheme is similar to DMS in many ways: a discount of at least 30%, local eligibility criteria, and restrictions on resale. The main difference is that First Homes is a government-backed scheme operating nationwide, while DMS schemes are managed locally and may have more varied rules.

Local Differences in the DMS Scheme

Every council can set their own rules. Check the detail locally before making any decisions. The size of the discount, the qualifying income, the types of homes included, and the list of local connection requirements differ widely. Some schemes only run for a limited time.

Some councils operate their own waiting lists. Others run a ‘first come, first served’ approach.

Always check what the rules are for your area.

Final Thoughts

The Discount Market Sale scheme can lower the cost of new-build homes to help local people afford to buy. It gives a direct and ongoing discount. It helps buyers take that first step onto the ladder. The property remains affordable for each new buyer.

You must meet strict criteria, use the home as your main residence, and sell again at a discount. Approval and mortgage processes are similar to the wider housing market, but make sure you meet all the eligibility rules before you view or reserve a home.

If you need more help, speak to your local council or a mortgage adviser familiar with affordable housing schemes.