Affordable Housing - is it really worth it?

warrenaldo

Hey folks,

Just been ofered a property on the affordable housing. Been waiting a long time. but the way the market is currently going im not so sure.

Ive been offered a property that i didnt pick. Its an average size 2 bed appartment in a decent(not great) area in tallaght.

Early days yet so i havent been given prices - but its around 180k - 50% discount. so its actual value is 360k. But do i believe its actual value is 360k no - its not worth it. But i have no say in this.

I am not planning on staying in the appartment for that long. 4/5 years then selling and getting a place elsewhere - where i can raise a family hopefully.

When i sell i have to pay the clawback of 50% of current value.
Since i bought for inflated vlaue of 360k(180k) my part. i believe 2 bed apts wont be easily shifted in a few years - unless in great location.

So i may be stuck in the same place in 4/5 years and cant sell my place.

I would love some input. Thanks.

Anna23

If I were in your shoes I would defo take it, think about it as a long term invest, and at the end of the day you can still sell it!

Jaybee

How long altogether were u on the list if you dont mind me asking?
I would go for it if I were you , many people out there would love to be offered their own place !

warrenaldo

i was on the list for 16 months in sdcc. the place is ok but not great. the thing is im paying 180k - 50%. but if i wanted to sell it tomor then i would prob only get 300k(150k). im already negative before ive even bought it. I have no say in the choice and no room to negotiate.
And with the amount of 2 bed appartments they are building in tallaght, citywest area at the moment. I think it will be very awkward to sell in a few years. And i will need to move out in 4/5 - so i will have to sell. Will it cripple me for life?
I think im just looking for reasurance tbh.

Jaybee

You could chance renting it out in 4/5 yrs, not really allowed but i Know a few that have done it and no probs so far?

warrenaldo

ye might not be a bad idea. but then how do i get the cash for the new place in 4/5 years if all my money is wrapped up in this appartment. I suppose id find a way.
I was all excited about getting the place - but now im starting to ponder.

Will i be able to sell it?
If i sell it will it be for a LOT less?

Afuera

I think that you're quite right to be concerned. All independant economists agree that the Irish property market is currently overvalued, though unfortunately there is no agreement on how overvalued it is. If we take a conservative overvaluation of 15% and presume that it takes 5 years to reach the bottom (typical time for a housing boom to unwind) then your apartment, which is now worth 360k, could be worth 306k in 5 years time.

If you sold at that stage, you would have to give half (153k) back to the corporation and the other half would barely pay off the remaing part of your mortgage (since you only really pay off the interest in the early years). Remember this is only a conservative estimate, some economists think that Irish property could be up to 70% overvalued! After all this, whether you manage to sell without making a loss or not, when trying to buy your next property you will no longer be a first time buyer and can expect no favours from the government.

If you're dead certain that you don't want to live there 4 or 5 years from now, IMHO you would be better off not availing of the affordable housing offer. The mortgage of 180,000 combined with insurance, furniture and decoration costs will set you back around 1200 monthly. This same figure will allow you to rent a decent spot for the next few years, avoid the risk of negative equity, retain your FTB status and buy the property you really want, when you're ready.

warrenaldo

thanks afuera - yove hit the nail on the head regarding my concerns. if i knew it was a 15 or even 20% drop then i would not be so concerned. But i believe with appartments the drop will be more dramatic also. Which gives me further cause for concern.

The renting option is definetly starting to become a lot more attractive. It seems like a risk free way of doing things.

I suppose a lot depends on the property i got offered. Is it a good area that will sell well in the future.

Zambia

From the little I know of the clawback stories from here I would walk away or see can you have it re-valued

Afuera

warrenaldo wrote:

I suppose a lot depends on the property i got offered. Is it a good area that will sell well in the future.

True. Definately try and access everything you can about it once you know more. Some places will be able to hold their values better than others.

Also, it mightn't be a bad thing to hold off on giving a definate yes/no answer to the apartment until the last minute. You'll be better able to guage the market after the election and if it doesn't take off then, I think it's pretty safe to say that the market will not pick up for quite a while to come.

godtabh

warrenaldo wrote:

Hey folks,

Just been ofered a property on the affordable housing. Been waiting a long time. but the way the market is currently going im not so sure.

Ive been offered a property that i didnt pick. Its an average size 2 bed appartment in a decent(not great) area in tallaght.

Early days yet so i havent been given prices - but its around 180k - 50% discount. so its actual value is 360k. But do i believe its actual value is 360k no - its not worth it. But i have no say in this.

I am not planning on staying in the appartment for that long. 4/5 years then selling and getting a place elsewhere - where i can raise a family hopefully.

When i sell i have to pay the clawback of 50% of current value.
Since i bought for inflated vlaue of 360k(180k) my part. i believe 2 bed apts wont be easily shifted in a few years - unless in great location.

So i may be stuck in the same place in 4/5 years and cant sell my place.

I would love some input. Thanks.

Talk about wanting your cake and eating it.

You've been offered a home at a greatly reduced price and you complaining? OK complaining might not be the correct word but your not happy with the prospect. The affordable housing scheme is meant to get people a home. Not a stop gap solution so they trade up and get closer to there ideal home.

Could you afford to buy it otherwise?

warrenaldo

no i cant afford to buy otherwise.
and yes it IS only a stopgap.
please tell me how i can start a family in a pokey 2 bed appartment. Its NOT designed for long term living - i am not talking about an ideal home at all.

But if i bought a home off the affordable for 360k(180k) today and its not really worth that on the open market. I can only sell it for 340k(170k) tomorrow. Then ive lost 10k - but i should be happy?

Please explain this?

CherieAmour

In my book, Affordable Homes are only worth it if you're willing to stay there long term. If you're not, then I'd have a serious think. The scheme is not meant to be seen as an investment opportunity but as a home to live in long term and build a life.

...to the person (or anyone for that matter) who knows people renting out their Affordable Homes, they should be shopped to the Council for this and thoroughly ashamed of themselves! It completely defeats the purpose of the scheme and anyone doing so doesn't deserve to have acquired one in the first place:mad: !

godtabh

warrenaldo wrote:

no i cant afford to buy otherwise.
and yes it IS only a stopgap.
please tell me how i can start a family in a pokey 2 bed appartment. Its NOT designed for long term living - i am not talking about an ideal home at all.

But if i bought a home off the affordable for 360k(180k) today and its not really worth that on the open market. I can only sell it for 340k(170k) tomorrow. Then ive lost 10k - but i should be happy?

Please explain this?

If you cant afford a home can you afford a home and a family?

What about renting?

I bought a home for €300k today. What happens when I sell it? I could make a profit or loss same as you but I didnt get mine for half price.

godtabh

CherieAmour wrote:

In my book, Affordable Homes are only worth it if you're willing to stay there long term. If you're not, then I'd have a serious think. The scheme is not meant to be seen as an investment opportunity but as a home to live in long term and build a life.

...to the person (or anyone for that matter) who knows people renting out their Affordable Homes, they should be shopped to the Council for this and thoroughly ashamed of themselves! It completely defeats the purpose of the scheme and anyone doing so doesn't deserve to have acquired one in the first place:mad: !

I agree with the first bit 100%.

As for the second bit I didnt know this was happening and against the rules. Dont know any one doing it though

Zambia

I think you have the answer to your question this apartment does not suit your needs long term. From what you have said

However this is not what the AH scheme considers as its unfeasible to give a three bed semi to a single bloke...its designed to allow you to buy what you can afford.

But I do not see the day when 180k buys you anything at all on the open market. You have to calculate a few things

How long am I gonna be able to live there ?
When i move on what do I think this house/apt will be worth at that time.
How much will I be able to borrow if i do not buy this house at that time.

In short as with all property you are gambling on the housing market the only way not to lose money is not to open. But as in gambling you have to know the strength of your hand and what the possible gain is...

Borzoi

warrenaldo wrote:

Please explain this?

1) Right, no one knows what the market will do over 5 years. NO ONE. Everything is speculation.

2) Very few people live in their first house all their lives. So yes, you might want to move.

However, while you can't control the market, you do control your own life. So what is your plan? Are you married/engaged? Do you have/want kids, how many and when? All these are financial (romantic, aspirational etc) decisions that YOU have control over, these should then be applied to what you want to do.

Noone will be upset if you don't take that apartment, with the possible exception of you. But if you're hanging on waiting to get a half price house in Ballsbridge, you could be waiting a while.

godtabh

Borzoi wrote:

kids, how many and when?

This you cant always control!

jdivision

To the best of my knowledge you can't make a loss when you sell the apartment. It's guranteed in the scheme. Worst case scenario is you get your money back. You may to check this as each local authority does things differently. You might also want to check if that e360k open market value includes tax incentives which would allow you to write off some or all of your income tax against the 180k cost. This happened in one of the previous SDCC schemes.

Moonbeam

I don't think people often have long term plans for their first house especially if they buy it on their own,situations change,marriage ,kids etc

I am also of the opinion that with affordable home that you are getting them at a discount so you should be happy that due to this you can afford a house rather then gonig out and having to work all hours and loosing quality of life to do it,

As for people renting out their affordable houses and not jsut a room in them to help them with the mortgage,I agree they should be reported as they obviously didn't need it.

jdivision

Moonbeam wrote:

As for people renting out their affordable houses and not jsut a room in them to help them with the mortgage,I agree they should be reported as they obviously didn't need it.

Agreed

warrenaldo

Thanks for the replies folks. have a partner and child. 2 bed appartment is not ideal but at the moment its the best we can get. So we are relatively happy living there for a while. We just dont know whether or not it makes sense financially - would we be better or renting.

Now i know that i should appreciate the fact i have been offered a place - but if its a bad deal financially maybe i should re-consider.

I just feel as though im in a no win situation. I have no say over the place i got off the affordable. location and size wise. and i cant buy otherwise.
I could rent - but is that a quick fix that i may regret a year down the line if property does not drop.

Suppose i can only answer a lot of these myself.
Thanks.

Afuera

jdivision wrote:

To the best of my knowledge you can't make a loss when you sell the apartment. It's guranteed in the scheme. Worst case scenario is you get your money back. You may to check this as each local authority does things differently.

Can you tell me which local authorities do that? I can't seem to find anything online suggesting that the buyer of an affordable house is shielded from making a loss when they sell.

The following is from Dublin City Council:

http://www.dublincity.ie/living_in_the_city/your_home/housing_services/affordable_housing/

Can I sell my property?

Yes, but please note that a claw back applies if you sell within 20 years due to the fact that the property was purchased at a discount price from the local authority.

What is the claw back?

* Claw back is the percentage you pay back to the council of the original discount received.
* Because you bought the property at a discount if you sell the property within 10 years, you pay back the full discount received.
* After 10 years, there is a sliding scale, which reduces the amount of claw back due to the council.
* After 20 years you do not pay any claw back to the council.
* This percentage depends on the initial discount that you received when you purchased your home.

The example below is a rough guide only, figures are not factual:

1. You buy a property with a market value of €200,000.
2. The property is sold to you for a price of €160,000.
3. You sell the property for €300,000.
4. The difference is €300,000 - €160,000 = €140,000.
5. Dublin City Council retains 20% of the sale value, 20% of €300,000 which is €60,000.
6. The claw back to Dublin City Council is €60,000 while you retain €80,000.

godtabh

Afuera wrote:

dcc wrote:

Can I sell my property?

Yes, but please note that a claw back applies if you sell within 20 years due to the fact that the property was purchased at a discount price from the local authority.

What is the claw back?

* Claw back is the percentage you pay back to the council of the original discount received.
* Because you bought the property at a discount if you sell the property within 10 years, you pay back the full discount received.
* After 10 years, there is a sliding scale, which reduces the amount of claw back due to the council.
* After 20 years you do not pay any claw back to the council.
* This percentage depends on the initial discount that you received when you purchased your home.

The example below is a rough guide only, figures are not factual:

1. You buy a property with a market value of €200,000.
2. The property is sold to you for a price of €160,000.
3. You sell the property for €300,000.
4. The difference is €300,000 - €160,000 = €140,000.
5. Dublin City Council retains 20% of the sale value, 20% of €300,000 which is €60,000.
6. The claw back to Dublin City Council is €60,000 while you retain €80,000.

If you follow that logic and sell the house for under €160k (possible) you end up with a negative value. How does that get dlt with claw back?

If yet to see an answer for that.

CherieAmour

kearnsr wrote:

As for the second bit I didnt know this was happening and against the rules. Dont know any one doing it though

It's very much against the rules. I didn't know there was anyone out there who would dream of doing it but Jenben1982 does....

jenben1982 wrote:

You could chance renting it out in 4/5 yrs, not really allowed but i Know a few that have done it and no probs so far?

It's not allowed at all !!!!! It shouldn't be advocated either!!!!! I would definitely blow the whistle on ANYONE doing this!!!!

On the money loss front, I do know that the council take into account if you are at a loss by selling but I don't know where this is written...final contract maybe?

gurramok

Afuera wrote:

Can you tell me which local authorities do that? I can't seem to find anything online suggesting that the buyer of an affordable house is shielded from making a loss when they sell.

Exactly.

I was in exact same situation(stated on boards a few months ago) as OP when i was 'nearly' offered a 2 bed apt by FCC in which i was not going to live in long-term.

Trading up in a few years to a house means i will be at a loss of many '000s as prices are falling as OP demonstrates.

There is nothing in the documentation to shield a purchaser from negative equity after clawback on any of the councils literature hence its a huge risk buying now in a place you dont want down the line.

godtabh

gurramok wrote:

Exactly.

I was in exact same situation(stated on boards a few months ago) as OP when i was 'nearly' offered a 2 bed apt by FCC in which i was not going to live in long-term.

Trading up in a few years to a house means i will be at a loss of many '000s as prices are falling as OP demonstrates.

There is nothing in the documentation to shield a purchaser from negative equity after clawback on any of the councils literature hence its a huge risk buying now in a place you dont want down the line.

How can you trade up if you cant afford a house? If houses prices were going up you'd jump at this casue you think you would make money.

I've yet to see a person who just wants a home to live in.

Jaybee

CherieAmour wrote:

It's very much against the rules. I didn't know there was anyone out there who would dream of doing it but Jenben1982 does....




It's not allowed at all !!!!! It shouldn't be advocated either!!!!! I would definitely blow the whistle on ANYONE doing this!!!!

On the money loss front, I do know that the council take into account if you are at a loss by selling but I don't know where this is written...final contract maybe?

FFS go blow your whistle somewhere else. Corrupt bloody country as it is.

Im just saying it like it is. Surprised you dont know that alot of people are doing it. Oh and men and women who buy houses NOT on the AH are doing it too. wohooo! AND they are not paying taxes either. Double wooohooo!!

Oh and lots of self employed people dodge paying full taxes! I know loads!

U living in a bubble!??

godtabh

jenben1982 wrote:

FFS go blow your whistle somewhere else. Corrupt bloody country as it is.

no wonder

jenben1982 wrote:

Im just saying it like it is. Surprised you dont know that alot of people are doing it.

doesnt make it right

jenben1982 wrote:

Oh and men and women who buy houses NOT on the AH are doing it too. wohooo! AND they are not paying taxes either. Double wooohooo!!

There are allowed too. They didnt get help buying a house and used there own funds

jenben1982 wrote:

Oh and lots of self employed people dodge paying full taxes! I know loads!

Your great but again it doenst make it right

jenben1982 wrote:

U living in a bubble!??

no an apartment

CherieAmour

jenben1982 wrote:

FFS go blow your whistle somewhere else. Corrupt bloody country as it is.

Im just saying it like it is. Surprised you dont know that alot of people are doing it. Oh and men and women who buy houses NOT on the AH are doing it too. wohooo! AND they are not paying taxes either. Double wooohooo!!

Oh and lots of self employed people dodge paying full taxes! I know loads!

U living in a bubble!??

I'm not living in a bubble thanks, I'm well aware of the amount of people on the con out there, I'm just honest - no wonder the country is corrupt with an attitude like yours:rolleyes:

And for the record, men and women who buy houses that aren't AH can do whatever the hell they like with them - they haven't conned the system and other people in genuine need of housing by availing of a scheme that disallows them to do so.

So woohooo and double woohooo all you like - do you rationalise all illegal/dishonest activity by saying, sure everyone is doing it?

Just because you CAN doesn't mean you SHOULD

Moonbeam

kearnsr wrote:

How can you trade up if you cant afford a house? If houses prices were going up you'd jump at this casue you think you would make money.

I've yet to see a person who just wants a home to live in.

Wages go up,people get better jobs with better money etc

I bought my house because I wanted a house that was mine,that I could do what ever I liked with.It is not in the area I would like nor is it as big as I would like but I worked hard for it and still do to pay if off every month.
When I am older and paid better or settle down with someone then I plan to trade up,I will have made money on my house compared to what I paid for it but not compared to the cost another house that I will buy will go up in the meantime and inflation.

Warrenaldo - Personally I think you are better off waiting for a house as you have a partner and child and that way you will have something a more long term to settle in and you never know your circumstances may change and you maybe able to afford a house in the meantime:)

Jaybee

CherieAmour wrote:

And for the record, men and women who buy houses that aren't AH can do whatever the hell they like with them - they haven't conned the system and other people in genuine need of housing by availing of a scheme that disallows them to do so.

First time buyers are liable to pay stamp duty & Tax on rental income on properties they rent out within the first 5/10 yrs not sure which one. So they are NOT allowed do what they want with it. Most get get caught applying for Mortgage TRS on two properties, and then a Revenue letter comes through the door.

I dont have an attitude your just extremely niave!!

godtabh

Moonbeam wrote:

Wages go up,people get better jobs with better money etc

I bought my house because I wanted a house that was mine,that I could do what ever I liked with.It is not in the area I would like nor is it as big as I would like but I worked hard for it and still do to pay if off every month.
When I am older and paid better or settle down with someone then I plan to trade up,I will have made money on my house compared to what I paid for it but not compared to the cost another house that I will buy will go up in the meantime and inflation.

Warrenaldo - Personally I think you are better off waiting for a house as you have a partner and child and that way you will have something a more long term to settle in and you never know your circumstances may change and you maybe able to afford a house in the meantime:)

The point that I was trying to make was that if he cant afford it now with the attention of children that affording it in the future might not be possible wither. Wages go up and so does everything else

comer_97

here's my thinking on this...

you are paying a mortgage of 180k so repayments of approx 1k a month. If you are renting you will be paying the exact same, if not more, lets say 1200.

After 5 years you will have a mortgage of approx 160k (check out http://www.jeacle.ie/mortgage/)

So you sell up at 320k and you have nothing to pay, of course you may sell for less, this rough work out is done over 25 years. Things could go well though, prices could go up as well as down.

You only loose if prices go down sharply and in that case you just don't sell.

If you rent you don't have any oppurtunity!

jdivision

Afuera wrote:

Can you tell me which local authorities do that? I can't seem to find anything online suggesting that the buyer of an affordable house is shielded from making a loss when they sell.

I believe it happens in Fingal. From my understanding when I bought my place I was liable to a clawback on the sale price minus what I'd spent on it and that I couldn't make a loss on it. I think somebody posted a link to something on that on another thread here.

Afuera

comer_97 wrote:

You only loose if prices go down sharply and in that case you just don't sell.

To get from 360k down to 320k over 5 years only requires a year-on-year decline of 2.25%. That's not exactly a sharp drop.

comer_97 wrote:

If you rent you don't have any oppurtunity!

As pointed out by many other posters, the affordable housing scheme should not be looked upon as an investment opportunity. It's there to put a roof over someones head. In the case of the OP it doesn't appear that what they are being offered would be adequate for their future needs (it's only just adequate for there current ones).

CherieAmour

jenben1982 wrote:

First time buyers are liable to pay stamp duty & Tax on rental income on properties they rent out within the first 5/10 yrs not sure which one. So they are NOT allowed do what they want with it. Most get get caught applying for Mortgage TRS on two properties, and then a Revenue letter comes through the door.

I dont have an attitude your just extremely niave!!

Read your own post. You said Oh and men and women who buy houses NOT on the AH are doing it too. as in, renting out their homes. Yes they may be liable for stamp duty & tax on it, but they are still allowed to do it. There is no rule that says a private owner can't rent out their property. There is a rule that states that the owner of an AH can't. It's as simple as that.

Believe me, I'm not naive.

I am, however, sick of people like yourself you seem to think it's okay to do something wrong provided you don't get caught. You're from the "everyone else is doing it so why can't I?" school of thinking and this equals "having an attitude" which you say you don't have.

What if we all went around doing whatever we liked and thinking solely of ourselves? Where would that leave us?

You seem to have missed the point that more than myself is trying to get through to you and that is that just because you CAN doesn't mean you SHOULD.

How would you feel about being offered a property while a family on the same affordable housing list who genuinely need to be housed are still waiting and you just buy yours to rent it out? Can you not see that this is wrong on so many levels?

- Actually, you probably can see that it's wrong, but your overriding opinion that you should be able to do as others in the wrong have done would dispel any doubts you might have in considering it.

comer_97

I was answering the OP's concerns. The affordable housing scheme is not supposed to be a stop gap measure but there are a lot of people out there who see it as that.

We may all be in the gutter but we are looking at the stars.

Afuera

jdivision wrote:

I believe it happens in Fingal. From my understanding when I bought my place I was liable to a clawback on the sale price minus what I'd spent on it and that I couldn't make a loss on it. I think somebody posted a link to something on that on another thread here.

I had a look at Fingal's website but still can't see anything about how they protect people from making a loss when they sell. The following text is pulled from one of the documents they have on their site:

http://www.fingalcoco.ie/YourLocalCouncil/Forms/Housing/ApplicationForm,1419,en.doc

5.CAN I SELL THE PROPERTY?
Homes purchased from the Council under the Shared Ownership/Affordable Housing Scheme can be sold. In the event of re-sale the seller must pay back to the Council any remaining mortgage or rented equity still owing and the clawback percentage of the actual amount the property is sold for.

The clawback percentages vary from property to property. These are set at time of sale and are based on the sale price and the market value price of the property.

The amount payable to the County Council reduces each year after year 10. The clawback no longer applies after year 20.

Example

House sold after five years for €300,000

Outstanding mortgage (estimated) €125,000
Clawback (30% of €300,000) €90,000
Amount owing to County Council €215,000

Balance €85,000

As far as I can see, since the clawback percentage is applied to the price that the house sells for later on, then it would still be applied even if they are selling at a loss.

Example:

House originally worth 200k, but bought under AH for 100k. The clawback percentage is 50%.

House sold 5 years later for 100k. 50k (50% of the sales price) needs to be returned to the council for the clawback. Outstanding mortgage of 80k (estimated) still needs to be paid back to bank. The AH buyer/seller is left 30k out of pocket.

The AH buyer is definately in a better position than the person that payed 200k outright for the same property but I can't see how they are immune to making a loss should they have to sell at a reduced price.

Jaybee

CherieAmour wrote:

Read your own post.
Believe me, I'm not naive.

I am, however, sick of people like yourself you seem to think it's okay to do something wrong provided you don't get caught. You're from the "everyone else is doing it so why can't I?" school of thinking and this equals "having an attitude" which you say you don't have.

You seem to have missed the point that more than myself is trying to get through to you and that is that just because you CAN doesn't mean you SHOULD.

How would you feel about being offered a property while a family on the same affordable housing list who genuinely need to be housed are still waiting and you just buy yours to rent it out? Can you not see that this is wrong on so many levels?

- Actually, you probably can see that it's wrong, but your overriding opinion that you should be able to do as others in the wrong have done would dispel any doubts you might have in considering it.

Hold on missy I AM NOT DOING IT!!!

CherieAmour

jenben1982 wrote:

Hold on missy I AM NOT DOING IT!!!

Fair enough, but you still don't see anything wrong with it

Madong

Afuera wrote:

I had a look at Fingal's website but still can't see anything about how they protect people from making a loss when they sell. The following text is pulled from one of the documents they have on their site:

http://www.fingalcoco.ie/YourLocalCouncil/Forms/Housing/ApplicationForm,1419,en.doc



As far as I can see, since the clawback percentage is applied to the price that the house sells for later on, then it would still be applied even if they are selling at a loss.

Example:

House originally worth 200k, but bought under AH for 100k. The clawback percentage is 50%.

House sold 5 years later for 100k. 50k (50% of the sales price) needs to be returned to the council for the clawback. Outstanding mortgage of 80k (estimated) still needs to be paid back to bank. The AH buyer/seller is left 30k out of pocket.

The AH buyer is definately in a better position than the person that payed 200k outright for the same property but I can't see how they are immune to making a loss should they have to sell at a reduced price.

Housing Micelanoeous Act 2004 covers clawback! http://www.irishstatutebook.ie/2004/en/act/pub/0043/sec0001.html#sec1

section 9 ;-)

CherieAmour

Madong wrote:

Housing Micelanoeous Act 2004 covers clawback! http://www.irishstatutebook.ie/2004/en/act/pub/0043/sec0001.html#sec1

section 9 ;-)

(d) Where the amount payable under paragraph (a) would reduce the proceeds of the sale (disregarding solicitor and estate agent's costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result.


Nice one Madong! Knew I heard it somewhere!

godtabh

CherieAmour wrote:

(d) Where the amount payable under paragraph (a) would reduce the proceeds of the sale (disregarding solicitor and estate agent's costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result.


Nice one Madong! Knew I heard it somewhere!

So does that mean you cant make a loss on the transaction? Just cant make as much as some people would like

CherieAmour

kearnsr wrote:

So does that mean you cant make a loss on the transaction? Just cant make as much as some people would like

That's my understanding of it... where the amount payable to the council as a result of paragraph A (the clawback) would reduce the proceeds, the council reduce the amount payable to them to avoid that happening.

ixoy

How do they determine the % of the clawback? Their outlined example gives a figure but not where they arrived at it.

CherieAmour

ixoy wrote:

How do they determine the % of the clawback? Their outlined example gives a figure but not where they arrived at it.

The formula is in Madong's link

Afuera

Madong wrote:

Housing Micelanoeous Act 2004 covers clawback! http://www.irishstatutebook.ie/2004/en/act/pub/0043/sec0001.html#sec1

section 9 ;-)

Thanks Madong, that's what I was looking for but couldn't find referenced elsewhere.

So with this provision in place, the clawback is waived (or reduced) if it pulls the seller into negative equity territory. Therefore the OP only really has to worry if the value of the property goes below the outstanding mortgage that they have on it.

After 5 years paying a mortgage of 180k, the OP will likely have about 160k left outstanding. For the apartment to reduce from it's current value of 360k to 160k, it would constitute a 55% drop. While it can't be ruled out, it's way up there with the highest estimations of overvaluation, and not likely to reach there that quickly.

Based on this, I don't think the OP has too much to worry about if they go ahead with the AH offer. The amount they pay for the mortgage is similar to the amount for rent. They may not be able to trade up in 5 years time as there may be no equity in the property, but they would be in a similar situation if they were renting anyway.

godtabh

Afuera wrote:

Based on this, I don't think the OP has too much to worry about if they go ahead with the AH offer. The amount they pay for the mortgage is similar to the amount for rent. They may not be able to trade up in 5 years time as there may be no equity in the property, but they would be in a similar situation if they were renting anyway.

The renting market could work out better for them in the long term in that the cost invloved in going up in the renting market would be smaller than that if they were to trade up by buying

Afuera

kearnsr wrote:

The renting market could work out better for them in the long term in that the cost invloved in going up in the renting market would be smaller than that if they were to trade up by buying

True. Also, the loss of FTB status may be an important factor too.

jdivision

Afuera wrote:

I had a look at Fingal's website but still can't see anything about how they protect people from making a loss when they sell.

Fair enough but just because it's not listed there doesn't mean it's not true. I was merely stating my understanding of the situation.