Vol. 511 No. 2
123 Mr. R. Bruton asked the Minister for the Environment and Local Government the income thresholds, the maximum mortgage, the minimum mortgage percentage and the interest rate which apply in respect of the shared ownership scheme, the home improvement loan and the affordable housing scheme; the provision, if any, he has made in the recent Estimates for changes in these criteria; and the date on which the changes will come into force. [23934/99]
The income thresholds in respect of the shared ownership scheme, the affordable housing scheme and the house improvement loan scheme are as follows: in the case of a single income household the gross income in the previous tax year must not exceed £20,000 and in the case of a two income household income eligibility is determined by a formula which takes account of the gross income in the preceding tax year of the principal earner and the subsidiary earner, that is, where two and a half times the income of the principal earner plus once the income of the subsidiary earner does not exceed £50,000, the household is eligible.
There is no maximum loan limit set for the affordable housing scheme. However, the maximum loan cannot exceed 95% of the sale price of the house and account has to be taken of the purchaser's ability to repay by reference to net income of the household. In the case of the shared ownership scheme a borrower must purchase at least 40% of the value of the house and rent the remaining share – 60% or less – from the local authority. The maximum house improvement loans are: £15,000 – £20,000 on off-shore islands – where the loan is secured by a mortgage on the house, and £6,000 where the loan is not secured.
The level of interest rates on local authority housing loans is determined by the Housing Finance Agency by reference to mortgage rates prevailing in the financial market. The level of interest charged on variable rate house purchase loans has recently been consolidated and a single rate is now applicable to all housing loans. The current rate is 3.85% with effect from 1 November 1999. The level of interest charged on fixed rate house purchase loans is currently 6.75% and is being reviewed by the Housing Finance Agency at present.
Should any changes to these criteria prove necessary or appropriate adequate provision to fund such changes will be made.
