Shared Ownership Loan

Shared Ownership is a system that facilitates access to full home ownership in two or more stages by persons who cannot afford full ownership immediately. The applicant initially acquires a share (at a minimum of 40%) in a house and rents the remainder from the local authority, with an undertaking to acquire the remaining equity within a 25-year period.

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Eligibility

The following are eligible for consideration under the Shared Ownership system:

1. Tenants and tenant/purchasers of local authority houses who intend to return their houses to the authority after providing a private house for their own occupation under the system.

2. Persons included by a local authority in its latest assessment of housing needs under Section 9 of the Housing Act, 1988, or accepted for inclusion in the next such assessment.

3. Tenants of one year's standing of houses provided by approved housing bodies under the Rental Subsidy Scheme, who intend to return their houses to the housing body on providing a private house for their own occupation under the system.

4. Persons in need of housing whose household income in the preceding tax year, calculated in accordance with a formula, does not exceed €92,000. Under the formula, income will be reckoned as follows:(A) In the case of a single-income household, two and a half times the borrower's income in the preceding tax year. (B) In the case of a two-income household, two and a half times the income of the principal earner, plus once the other income.

Type of House

Under the Shared Ownership system, a new or existing house may be purchased or a new house built. The applicant chooses the house, but the local authority must be satisfied that the house being acquired is reasonably priced and of suitable size and standard to cater for the applicant's needs.

An existing house must have hot and cold water systems, a fixed shower or bath and an indoor toilet. If it is a new house, the requirements as to the construction standards must be met. Applicants are advised to arrange their own independent survey to establish the structural condition of the premises. Examination of the premises by the County Council in no way implies a guarantee to the applicant as to the structural condition.

Payment

The applicant's share in the ownership of the house will be paid for by:

a)      A deposit of at least €1,270

b)      A mortgage

The applicant's share in the house will normally be funded by way of a mortgage loan from the local authority, but cash may be contributed if the applicant is in a position to do so.

The Mortgage is for a 25-year term at a variable interest rate, which is currently 2.95%. Mortgage protection insurance is added to the mortgage repayment at a rate of .598%. The benefits of the mortgage protection insurance are:

1. Life cover in respect of mortgagee on the mortgage aspect only.
2. Long-term illness cover in respect of the principal earner.

Rent will be payable by the purchaser each year on the original rented equity, and will be calculated at 4.3%, increasing by 4.5%(fixed) on 1 July each year.

1. Year 1-4.3%
2. Year 2-4.4935%
3. Year 3-4.6957%
4. Year 4-4.907%

The revised rent will apply for the year commencing on 1 July each year. In all cases, a minimum of €2 per week  rent is payable, including by those who qualify for a subsidy. Households with a gross income not exceeding €25,500 in the preceding tax year will qualify for an annual subsidy towards the rent.

Purchasing Local Authority Shares

If you are occupying a house under the Shared Ownership system, you have the right to buy out the local authority's share of the ownership and acquire full ownership at any time. Alternatively, you may purchase additional shares of the authority's equity from time to time. The amount and frequency of such purchases is a matter for determination by the local authority.

The  cost of purchasing an additional share is the initial capital balance sum updated to the date of purchase. Purchases of additional shares may be financed by raising a further mortgage loan or by cash payments. Applicants are required to buy out the full ownership within a 25-year period. However, there is no requirement to repay all capital outstanding on the mortgage within the 25-year period. In fact, the occupier can buy out the remaining equity when the original mortgage is paid off.