- What is the Shared Ownership Scheme?
The Shared Ownership Scheme is aimed at people in Ireland who cannot afford to buy their entire home in one go. It allows you to buy a proportion of your home to begin with, increasing that proportion in steps until you own the whole house. Whilst you are buying a portion of your home, ownership is shared between yourself and the local authority and you make payments on a mortgage for the part you own and pay rent to the local authority for the other part at a rate of 4.3%.
Once you have been approved in principle for shared ownership by the local authority, you can start looking for a new or existing house or build a new house. Your local authority may also have homes for sale under the scheme at a discount from market value. The home must be suitable for your needs, meet certain minimum standards and be acceptable to the local authority. If the local authority considers that you can afford the mortgage repayments and the rent, it will buy the house/apartment and grant you a shared ownership lease.
If you want to build your own house you may be eligible for a site at low or nominal cost from the local authority.
From the start, you must buy at least 40% of the price of the house.
You may increase the proportion you are buying at any time, either by adding to your mortgage or paying cash. You are required to purchase the full ownership within 30 years. This does not mean that you have to repay all capital outstanding on the mortgage within the 30 year period. You may take out another mortgage to buy out the remaining share when the original mortgage is paid off.
- Is there a maximum purchase price on a property?
Some local authorities operate an upper limit on the amount that can be borrowed under the shared ownership scheme. This will vary, depending on where in Ireland the property is located and the local authority to which you apply. Contact the Housing Department of your local authority for information.
Local authorities may also set a maximum percentage of income which they will allow to be apportioned to rental/mortgage payments. In each case the long-term viability of the mortgage/rental payments is the key concern. Again, check with the Housing Department of your local authority for their policy on this issue.
- Can I sell my Shared Ownership Home?
You can sell your house/apartment at any time. The local authority will of course be entitled to claim the value of the proportion it owns at the time of sale. If the local authority provided you with the house/apartment at a discount from the market value, you must refund a proportion of this discount to the local authority, depending on how long you have lived in it.
Stamp dutyTransactions under the shared ownership scheme are exempt from stamp duty. Local authorities are also required to keep legal costs to a minimum. Read more about stamp duty in Ireland here. Read more about costs associated with buying a home here.
- Do I qualify for the Shared Ownership Scheme?
Rules To qualify for the Shared Ownership Scheme you must be:
- in need of housing and your income must satisfy the income test below, or
- registered on a housing waiting list with a local authority, or a local authority tenant or a tenant purchaser (if you want to buy a private house, you must return your present local authority house to the local authority), or
- a tenant for more than one year of a home provided by a housing association under the Capital Loan Scheme and you want to buy a private house/apartment and return your present house/apartment to the housing association.
Note that the income test only applies to the first category; if you are covered by the second, third or fourth category, you are exempt from the income test.
You must buy at least 40% of the price the local authority paid for the house/apartment.
The income test
- Single income household:
if your gross income (before tax) in the last income tax year was 40,000 euro or less you are eligible. (Before January 2006 the income limit was 36,800 euro).
- Two income households:
multiply the gross income (before tax) of the higher earner in the last income tax year by 2.5. Add the gross income of the other earner in the last income tax year. If the answer is 100,000 euro or less you are eligible. (Before January 2006 the income limit was 92,000 euro).
Rates
- Total monthly payment
Obviously this will depend on the cost of the house, the proportion you are renting and current interest rates - Rent subsidy
If your household income in the last income tax year was less than 28,000 euro per year, you will qualify for a rent subsidy that varies from 1,050 to 2,550 per year as long as the subsidy does not reduce the rent below one euro per week. - Deposit
The local authority may waive the 1,270 deposit if
- you are resettling in a rural area from a major urban area and
- you are giving up a local authority house or you have been approved for local authority housing.
- How do I apply for the Shared Ownership Scheme?
To apply for the Shared Ownership Scheme, you must contact the local authority in the area where you want to buy a house.
