Taking a different route

The shared-ownership system opens the possibility of home ownership to people on average incomes who cannot afford to purchase a property in the usual way. The funding is in place for 7,000 households to avail of the scheme over the next six years. To qualify for shared ownership you must be:

in need of housing with an income that satisfies the income test;

a person whose application for local authority housing has been approved by the local authority;

a local authority tenant or tenant purchaser who wishes to buy a private house and to return your present house to the local authority. The income test is simple for a single-income household and applies to the previous tax year. The cut-off point for eligibility is £25,000 (€31,766) per annum before tax. In a two-income household, you multiply the gross income of the greater earner in the last tax year by 2.5 and add the gross income of the lesser earner. If the result is £62,500 or less, you are eligible. Various combinations of incomes will satisfy this test, for example £20,000 and £12,000. Various groups are exempt from the income test, including approved applicants for local authority housing, tenants and tenant purchasers of local authority dwellings, and tenants for more than one year of Rental Subsidy Scheme housing surrendering their dwellings.

Once the local authority has bought a property and granted you a shared-ownership lease, your regular outgoings will consist of the repayments on your mortgage plus rent on the share of the property owned by the local authority.

These outgoings must not amount to more than 35 per cent of your net income. The rent may be subsidised if the household income in the previous tax year was £20,000 or less. Rent is calculated at 4.5 per cent of the cost of the rented share, adjusted each year for inflation. The mortgage interest rate is variable and is 6.17 per cent APR at present, excluding mortgage protection. You must begin by buying at least 40 per cent of the value of the house from the local authority.