Published 17 Jun 2015
What Are the Minimum Income Requirements for Shared Ownership?
At Peabody, we aim to sell to first time buyers who are able to afford the cost of Shared Ownership but unable to buy a suitable home by any other means. Household income requirements are set for each of our developments to ensure that applicants are able to afford the property and meet mortgage and rent payments without overstretching themselves. These requirements differ from scheme to scheme and reflect current house prices, equities for sale and, in certain instances, local authority policy.
How we calculate minimum income requirements
The minimum requirements you need to meet are worked out using a calculator from the Greater London Authority (GLA) and the Homes and Communities Agency (HCA). The calculator is used to ensure that the monthly mortgage you would pay along with rent and monthly service charge total is no more than 45% of your net income.
Say a property is valued at £300,000 and you would like to buy the minimum share available (30%) for £90,000.The income requirement calculation is conducted by first assuming the following:
- Mortgage interest rate is set at 5.00% over a 30 year mortgage period.
- Monthly service charge is set at £150 per month (£1,800 per annum).
- Rent is set at 2.00% of the unsold equity (70% in this example).
- You have a 10% deposit of £9,000 for the 30% share.
We will then input all of this into an income calculator provided by the HCA setting a debt to net income ratio of 45%. Using this example above, your monthly outgoings consisting of mortgage, rent and service charge would be £939.10.
Therefore, your total net household income would have to be a minimum of £33,841 for you to be able to afford a 30% share of a Shared Ownership property using the example shown.
Maximum household income requirements for Shared Ownership
Maximum household income restrictions are set by the GLA to ensure that Shared Ownership benefits people on lower incomes in need of affordable home ownership.
The GLA states your total gross household income needs to be no more than £90,000 per annum. A lower income limit (£80,000) is applicable to developments outside London boroughs. However, in some instances, local authorities for each London Borough may set a lower household income limit.
Am I eligible for Shared Ownership?
At Peabody, we ask all applicants to complete a Shared Ownership application form using a unique user login. The application form will allow our team to ensure that you are eligible for a Shared Ownership property. If you haven’t created a login yet, you can do so by registering here.
At the time of launching a development, we will also ask you to complete a financial assessment with an appointed Mortgage Advisor before viewing a property to ensure your household income meets the minimum income required and that the property is affordable to you.
Contact our team
For more information about the minimum and maximum household income requirements for Shared Ownership properties, you can contact a member of our team by email firstname.lastname@example.org or call them on 020 7021 4842.
If you are interested in Shared Ownership, you can begin by using our property search to find your ideal home.