Shared Ownership Question

Danny2580

Just a quick few questions.

With the shared ownership load, the buyer pays two sums each month to the council - 1. part of the mortgage, 2. Rent payable for the council's part of the money.

My question is; is the rent payable to the council essentially "dead" money?

Also, how does one go about purchasing the remaining share owned by the council from them?

Does anybody have any experience of shared ownership and how did they find it?

antoinolachtnai

rent is not dead money. Rent is money paid for a service, just like mortgage interest.

Danny2580

Anyone got a more pragmatic answer to this?!

Dandelion6

Danny2580 wrote:

My question is; is the rent payable to the council essentially "dead" money?

Yes. From a practical financial perspective, you are also not eligible for mortgage relief on it, so you want to increase the proportion of the property that you own as soon and as much as you can.

Also, how does one go about purchasing the remaining share owned by the council from them?

Are you looking to buy it out all at once or a little at a time? I'm not sure what the procedure is to buy it out all at once. In DCC, you can start buying it out in minimum €1,000 increments by bringing the payment to their cash desk. As I understand it, they will only make adjustments once a year, at the end of June, so you're best off saving up as much as you can until then and keeping it in your bank account to earn interest from.

That's my understanding anyway, although note that I only bought my place a few months ago.

Danny2580

Thanks mate, much appreciated!

ircoha

Danny2580 wrote:

Just a quick few questions.

With the shared ownership load, the buyer pays two sums each month to the council - 1. part of the mortgage, 2. Rent payable for the council's part of the money.

My question is; is the rent payable to the council essentially "dead" money?

Also, how does one go about purchasing the remaining share owned by the council from them?

Does anybody have any experience of shared ownership and how did they find it?

lets put some numbers on this, all thousands:
Mkt price 300 made up as follws

rented 20
Mtg 120
Balance 160

The rented piece is put in place to allow people who dont earn enough to meet the rules on affordable, it is in a sense an additional loan but called rent to bend the loan to value rules.
Therefore it is a little disingenuous to dismiss it as dead money, particularly whe u are getting an asset worth 300 for 140.

The rented piece also gives u an advantage: the CoCo is laible for maintenence on the house as if it were a 'council house'

The rented piece can be reduced as described elsewhere and then the balance of 160 is written off over 20 years with no change for the first ten.

The lack of mtge interest relief on the rented piece is not a big deal because if even if u dont exceed the ceiling on the revenue thresholds the value is as follows:
20 by 4.5% = 900 euro by lower tax rate of 20% = 15 euro a month.

Howmuch maintenance can you get for 15 euro amonth

Dandelion6

ircoha wrote:

The rented piece also gives u an advantage: the CoCo is laible for maintenence on the house as if it were a 'council house'

That's not what I was told. They'll look after problems I find that were missed by their snag, but the rest of it is up to me.

It also differs from a true mortgage in that it's not covered by your mortgage protection insurance.

And frankly, when you're on an income low enough to make you have to take part in the Shared Ownership Scheme, €15 a month is nothing to sneeze at.

texas star

Hi I was wondering as Im doing this scheme in the next few weeks,can I claim rent allowance then? I thought I could get the morgrage relief. Thanks

Dandelion6

No, only if you're in private rented accommodation.