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Tenant Purchase Scheme
Who is eligible to purchase?
If you have been a tenant of Sligo Borough Council house for at least one year, you may apply to them to purchase the house you rent, either outright or by way of shared ownership.
Is there a closing date?
The scheme is a permanent one with no closing date, thus allowing tenants to apply to purchase in their own time as their circumstances allow.
How is the purchase price calculated?
The price of the house will be its market value, as determined by the Sligo Borough Council, in its existing state of repair and condition, less discounts. The structural condition of the house will be taken into account and any increase in the market value due to improvements you made to the house will be disregarded in calculating the price.
What discounts are available?
You will be allowed discount of 3% of the value of the house for each year of tenancy (up to a maximum of 10 years) of a Sligo Borough Council house plus £3,000 (€3,809). With 10 years tenancy, you qualify for a discount of £27,000 (€34,290) on a house valued £80,000 (€101,600). The purchase price of your house would therefore be £53,000 (€67,310) .
How is outright purchase financed?
The purchase price will be payable at the point of sale and the tenant, as purchaser, will be responsible for raising the necessary finance. If you need to get a mortgage loan, as most purchasers will, you have the choice of applying to Sligo Borough Council or to a bank or building society. Sligo Borough Council will be able to offer you
- A loan at a variable interest rate (i.e. it varies up or down as interest rates generally change); at present (January 2001) the variable interest rate is 6.00% (APR 6.17%), or
- A loan with the interest rate fixed for the first five years of the loan. The present (January 2001) rate for these loans is 6.5% (typical APR 6.7%).
In addition a charge of 0.67% applies in respect of mortgage protection insurance.
Building societies and banks have agreed to consider loan applications from tenants purchasing their houses outright on the same basis as if you were applying for a loan for a private house. You will not need to put down a cash deposit on the dwelling or to have the money invested with the society or bank. You will have the same range of options as any other borrower in regard to the type of loan, interest rates, etc.
What about shared ownership?
Shared ownership enables a tenant who cannot afford outright ownership of a house in one step to buy a share in the house now and the remainder at later stages but within 25 years. The share you buy initially would normally be 50% of the purchase price of the house. Sligo Borough Council would own the remaining share and its value increases in line with inflation.
How is shared ownership financed?
You can obtain a mortgage loan from Sligo Borough Council to meet the cost of the share you are purchasing; this loan may be a variable or fixed rate one. You will then have to meet the repayments on this loan and pay a rent to Sligo Borough Council for the share you have not yet bought. This rent is calculated at 4.5% per annum of the cost of the rented share, adjusted each year in line with inflation.
How can a tenant increase his/her share of ownership?
You may do this by making a cash payment to Sligo Borough Council or by getting a further loan from them.
Can a tenant contest a Sligo Borough Council valuation?
Yes, but you must submit a valuation certificate from a qualified valuer to support your claim. In the event of a significant difference between the authority’s original valuation and that submitted by the tenant, the authority will refer the matter to the Valuation Office.
Are any houses not for sale?
In general, all houses are included in the scheme with the exception of houses provided for and occupied by elderly persons and flats. Authorities may, at their discretion, exclude houses for reasons of good estate management, because of their structural condition or if they have proposals to carry out remedial works to them.
Does the Sligo Borough Council have to put the house into good structural condition?
No. The sale price of your house will reflect its existing state of repair and condition. The Sligo Borough Council is under no obligation to put any house being purchased into good structural condition prior to sale. No warranty by the Sligo Borough Council shall apply, or be deemed to be implied, as to the state of repair or condition, or the fitness for human habitation of any house sold under the purchase scheme.
Who is responsible for the maintenance after purchase?
Like all homeowners, you will be fully responsible for the upkeep and maintenance of your house from the date you sign the purchase agreement with the Sligo Borough Council.
Do tenant purchasers qualify for tax relief?
Yes. You may qualify for the usual income tax relief on mortgage interest. In 2000/2001 the ceiling on mortgage interest for income tax relief in the case of first time purchasers is £2,500 (€3,175) for a single person and £5,000 (€6350) for a married couple. Your local Inspector of taxes will give you full details.
Is mortgage protection insurance required?
Mortgage protection insurance is compulsory in the case of a Sligo Borough Council mortgage and is currently (January 2001) charged at the rate of 0.67% per annum which is added to the interest rate on your loan. Building societies and banks also normally require and arrange mortgage protection insurance.
Stamp Duty?
No stamp duty is payable on the sale of the house.
Are there restrictions on the use/resale of the house?
Yes. The house must, unless the Sligo Borough Council otherwise allow, be occupied as a normal place of residence by the purchaser, the purchasers family or successor in title. If you wish to sell the house within a period of 20 years from the date of purchase or before you have acquired full ownership, you must get the consent of the Sligo Borough Council.
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IR£
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IR£
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| Market Value
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60,000
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75,000
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| Discount (10 years tenancy)
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18,000
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22,500
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| Grant
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3,000
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3,000
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| Sale Price
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39,000
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49,500
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| Weekly Outgoings
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| Mortgage Repayment based on Outright Purchase Over 25 Years (includes mortgage
protection insurance)
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62
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79
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| Repayments based on shared ownership option of 50% of sale price and rent
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48
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61
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In addition, the above outgoings may be further reduced by income tax relief.
Where can I get further information?
Further information is available from the Sligo Borough.
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