Church Cottages in Goathland are two properties that were left to the community in perpetuity and were historically managed by the parish council.
One is now completely derelict while the other, which has a tenant, requires significant modernisation.
Last year the Church Cottages Trust was registered as a charity with seven trustees, who want to renovate the cottages and rent them out at below the market rate.
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They will let them to young people priced out of the area, elderly or infirm residents, or those considered to be disadvantaged.
They have applied for a £31,493 Community Housing Fund grant from the council and will match-fund the amount themselves to cover the cost of work.
The existing tenant will be moved into the derelict cottage once it has been renovated, before a full modernisation of the occupied property begins.
Cllr Carl Maw, cabinet member for stronger communities and housing, said: "We have been clear from the start that providing quality, sustainable and crucially affordable homes throughout the borough for local people is our top priority.
"The affordability of homes, particularly in our rural areas, has been a long-standing problem for this authority.
"Through schemes like this one in Goathland we will enable current and future generations to remain in the places they grew up and to continue to contribute to a thriving rural economy."
The renovation of the first cottage would be the second community-led housing project that the council has supported through the Community Housing Fund.
It follows the successful development of two flats for rent by Hinderwell Almshouses Trust in 2019.
The village of Goathland, known for its Heartbeat connections and North Yorkshire Moors Railway station, has become one of the most expensive housing markets in the area, and is popular with well-off retirees.