Affordable Housing Plunge Dublin?

Maximus11

Sample scenario.

I'm a FTB on the waiting list for a 2 bed apt in Dublin and cannot afford a decent property at current prices. I'm only interested in really top locations though due the current potential housing downturn. The way I see it apartments in great locations are not going to depreciate. If I don't get lucky in the scheme I'll simply bide my time, keep saving a lump deposit and then buy when it looks like we're at an all time low.

The things I need to consider re affordable housing are the following which I'd appreciate any advice on:

- The rules stipulate that you must live in the dwelling, is it permitted though to rent out the spare room to help with the mortgage?
- Being realistic I'm not going to live in the apt long-term so should I really be considering this option even given you could get a great location e.g D4, D6 etc? Or is it mad to turn down a 2 bed apt worth potentially 650k which can be bought for 250k? (I'm aware of clawback). I'm just thinking long-term that an apartment, however spacious and nice is not a great place to raise a family. On the other side of the coin it would be wishful thinking to be in a position in future to be able to purchase a house in any of these desirable locations without affordable housing.
- If I decide to move in 5-10 years and don't wish to sell what are the implications if I wished to purchase another house i.e. do I still HAVE to live in the apt as opposed to renting it out. How can this be monitored effectively? Being realistic I'd imagine that a lot of affordable housing units will end up getting rented out on the quiet in future although this is surely unethical but a realist view.

All comments/advice much appreciated.

Noelie

I got to say i think this is why the affordable housing scheme is flawed.

pinkypinky

I am in a similar position and because of the restrictions, have decided to buy commercially. You cannot rent out the whole property under the current scheme. You can avail of the rent a room scheme. You must occupy it and not own any other properties. If you re-mortgage or change provider, you must pay the clawback which applies until you have been there 20 years. Also, restrictions set in place in the 1986 local government act means that the council can force which mortgage protection policy provider you go with and it is much higher than the norm.

stovelid

Maximus11 wrote:

I'm only interested in really top locations though due the current potential housing downturn. The way I see it apartments in great locations are not going to depreciate.

Have a word with them ASAP.

Make sure and emphasize that it's purely for investment purposes and not any of that stupid 'needing a home' lark.

Don't consider anything outside D4 or D6, naturally.

gurramok

If you starting renting your apt out fully, whether its affordable or not, you become an investor.
Rent a room should be ok as long as its within the regulations imho.

If you circumvent the renting laws, revenue will catch you with interest accrued, they always do if it takes them 1yr or 7yrs.

As getting that apt in D4/D6..they are really only offering them in numbers in the docklands where locals get first preference(think its 40% of units), rest to 'outsiders'.

And yes, due to clawback, affordable housing is aimed at long term(10yr+) stay rather than short term so it's flawed.

How Strange

Maximus11...I'm only interested in really top locations though due the current potential housing downturn.is it mad to turn down a 2 bed apt worth potentially 650k which can be bought for 250k?

Wow, that little fairytale you have going for yourself really cheered me up. With an attitude like that I hope DCC see right through you and give the apt to someone who truly needs and deserves it.

Firstly there is no/very little aff housing in D2/D4. Why? Because the cunning developers bought their way out of having to provide it. As a previous poster said, the properties on the Docklands are being given to people and families (yes families, can you imagine it! Raising your children in an apt, what are we europeans?) who live in the area. And thank god for that I say.

And where oh where did you hear you would get a €650k apt for €250k? You get the apt for up to 30% less than market value. Really, if you were that interested in aff housing you would know this already.

Finally, owners be warned. Word has it that when the revenue have sucked all the money out of peopel with foreign bank accounts etc they are coming after the undeclared landlords who bought houses and rented them out while pretending to live in them. They have to fill the coffers somehow and this will be one of their next projects.

Keith C

Im still laughing at the original post!!! Someones filling your head with nonsense if you think thats gonna happen.

Maximus11

Keith C wrote:

Im still laughing at the original post!!! Someones filling your head with nonsense if you think thats gonna happen.

BTW. If you read the post correctly you would see that's it's a sample scenario!! This has been a topic of discussion between some friends of mine that have applied for this scheme....figured the best way to get answers to these questions was through a forum. There's a lot of lack of knowledge out there.

I myself would have no problem living long term in a decent apartment and think the Irish obsession with houses is about to have a rude awakening.

I have heard some stories of people buying off the scheme just to say they own a place that have no long term plans to live there, don't see the logic in that and they're only giving themselves hassle down the line.

I'm tired of cliches like 'Property ladder' or 'Rent is dead money'. We need to adapt the attitudes of our French & German neighbours. Nothing wrong with renting until your in a strong position to buy. BOOM times are over.

How Strange

Maximus11: This has been a topic of discussion between some friends of mine that have applied for this scheme....figured the best way to get answers to these questions was through a forum. There's a lot of lack of knowledge out there.

Wrong. DCC, DLRCC and other councils have reams and reams of information on their website telling you everything you need to know.

Maybe you don't realise this but when you buy your place through aff housing you still have to pay a mortgage so if the place costs you €250k then you will be paying back 900-1000 pm. Would you go off and buy a property privately without having some real facts and figures?

Maximus11

How Strange wrote:

Maybe you don't realise this but when you buy your place through aff housing you still have to pay a mortgage so if the place costs you €250k then you will be paying back 900-1000 pm. Would you go off and buy a property privately without having some real facts and figures?

Is that what happens when you get a mortgage? Fascinating. You must be a broker or financial adviser, great that I'm getting this advice free if charge

As for facts & figures you maybe correct when saying that it's available out there but you really need to dig for some of the not so obvious answers. You would be suprised at the amount of people that have dived into the affordable housing scheme without considering the long term implications. A fantastic scheme if you are to stay put but to quote one person who bought recently "I'll keep it for 4-5 years and then see what happens".

mikemac

gurramok wrote:

If you circumvent the renting laws, revenue will catch you with interest accrued, they always do if it takes them 1yr or 7yrs.

This man speaks the truth
Revenue couldn't care less if you rent out your affordable home for years and years because once they catch you (and they will) then you owe penalty interest on all the money you owe.
All it takes is one tenant to send in a Rent1 form looking for rent relief and you're on their rader.
There's no way you can stop a tenant doing this and after all, if you getting a discount worth thousands, noone would begrudge a tenant getting their miserable €360 tax credits per annum.

How Strange is right, when taxes dry up next time, landlords are the next Ansbacher accounts. I've seen it called the Rainy Day fund here.

And enough of D4/D6 nonsense. I was in Ringsend in the heart of D4 the other day, bit of kip tbh

Calina

Maximus11 wrote:

....
I'm tired of cliches like 'Property ladder' or 'Rent is dead money'. We need to adapt the attitudes of our French & German neighbours. Nothing wrong with renting until your in a strong position to buy. BOOM times are over.

This is a naive and overly simplistic position. Most people historically rented until they were in a strong position to buy. Historically that didn't take long because property on average didn't cost well over 10 times the average salary for a one bedroomed apartment in the middle of nowhere.

Now, unfortunately, people are screwed. Property is overly expensive, albeit falling in upfront terms, mortgage maintenance is rising. Rents are rising and landlords - of whom I know a few - are completely naive about what renting involves. Consumers of rental property have the attitudes they have because they get screwed over by the rental market here, they have a shocking lack of legal protection. We will not get the attitudes to renting from a demand point of view in this country that they have in France and Germany until we have the legal protections for renters that they have in these countries. Unfortunately, mention security of tenure to a landlord in Ireland and they have near heart attacks. The greatest rental injustice in this country is that a tenancy can be ended for property sale or retention by relatives of the owner. Owners provide a service yet but they appear to forget that people who are paying for that service have certain rights.

Attitude is one thing. It needs to be enforced with something a little more spineful than the 2004 Act and PRTB.

TwoShedsJackson

Maximus11 wrote:

I'm tired of cliches like 'Property ladder' or 'Rent is dead money'. We need to adapt the attitudes of our French & German neighbours. Nothing wrong with renting until your in a strong position to buy. BOOM times are over.

`

Nothing wrong with renting in France or Germany alright, where they have actual laws to guard against ridiculous rent rises, tenants get automatic first choice on the apartment if landlord decides to sell etc. versus here, where the tenant gets fu<k all. Check out what tenants rights and security of tenure are like on the continent, then you see why they are happy to rent most or all their lives.

Nermal

pinkypinky wrote:

You must occupy it and not own any other properties.

Huh? You can't buy another after buying an affordable one?

Dandelion6

Maximus11 wrote:

- The rules stipulate that you must live in the dwelling, is it permitted though to rent out the spare room to help with the mortgage?

That depends on your agreement with the mortgage provider. It shouldn't be a problem if you're getting a mortgage from a bank. If you're doing the shared ownership scheme, DCC will not allow you to rent out a spare room without their permission (though it's hard to see how they would know if you did).

jdivision

pinkypinky wrote:

You must occupy it and not own any other properties. .

At the time of purchase yes but no restriction after that afaik

vallnett

Dandelion6 wrote:

That depends on your agreement with the mortgage provider. It shouldn't be a problem if you're getting a mortgage from a bank. If you're doing the shared ownership scheme, DCC will not allow you to rent out a spare room without their permission (though it's hard to see how they would know if you did).

I got a call from DCC to confirm my income for the current draw and I had included an approval in principle letter which took into account renting out a room. I was told by the girl in DCC that you are not permitted to rent out a room under the scheme. I don't really see how they would enforce this though...

Caychadh

If you sell the apartment in under ten years you'll have to pay the council about 50% clawback. So they'll get half the money you get form the sale. It's how they discourage profiteering. The clawback then decreases between years 10-20. Only after 20 years is the property truly yours.
Renting a room is acceptable in all the councils but you have to be an owner occupier or they'll take the house back if they find out you're not.

Dandelion6

Caychadh wrote:

Renting a room is acceptable in all the councils

My mortgage agreement with DCC says it isn't (unless I get prior written permission). The poster above was also told by DCC that it isn't. So on what basis are you saying that it is?

anotherlostie

Maximus11 wrote:

Sample scenario.

I'm a FTB on the waiting list for a 2 bed apt in Dublin and cannot afford a decent property at current prices. I'm only interested in really top locations though due the current potential housing downturn. The way I see it apartments in great locations are not going to depreciate. If I don't get lucky in the scheme I'll simply bide my time, keep saving a lump deposit and then buy when it looks like we're at an all time low.

All comments/advice much appreciated.

I bought my apartment near Clondalkin; there was no way I could afford D4/6 prices (or indeed D16). It makes me sick to hear people with your attitude talking about cherrypicking where they want to live in this manner.

I would strongly be in favour of what the developers of Ballintyre proposed, i.e. building many more apartments in Stepaside that the scheme required them to do in Ballintyre - this would facilitate, say 100 people instead of 20-30.

Dandelion6

anotherlostie wrote:

I bought my apartment near Clondalkin; there was no way I could afford D4/6 prices (or indeed D16). It makes me sick to hear people with your attitude talking about cherrypicking where they want to live in this manner.

In fairness, most people "cherrypick" where they want to live. It's only smart to do so if you'll be living in a place for any length of time.

The present situation, in which people are buying wherever they can afford to, hasn't been good for this country. It's allowed developments to spring up in places where there is no infrastructure for them (schools, transport etc). It's created a generation of young adults perpetually stuck in traffic and it's going to create a generation of kids with nothing to do but get in trouble. It is also very likely going to create a situation in which a lot of people find themselves with negative equity when the economy tanks. Obviously this is not their own fault because people have to live somewhere. But if a person who wants to avail of affordable housing is in a position to wait until a place comes along that meets their personal needs and is not likely to crash in value, I don't see any reason why they shouldn't.

SkepticOne

I would agree that if you must buy at the present time, try for an affordable house in a very good area. These seem to give the greatest discount and you are therefore protected from the downturn to the maximum extent. No way would I buy on the open market at the moment. Why buy a flat on the open market when you can get a house in a good area for the same price?

stovelid

Dandelion6 wrote:

But if a person who wants to avail of affordable housing is in a position to wait until a place comes along that meets their personal needs and is not likely to crash in value, I don't see any reason why they shouldn't.

Maybe because affordable housing is to help people find a home as opposed to offering cut-price property investments?

Dandelion6

stovelid wrote:

Maybe because affordable housing is to help people find a home as opposed to offering cut-price property investments?

I don't see anything to suggest the poster is looking for a cut-price property investment. It sounds to me as though he's just being realistic and trying not to end up getting stuck with a property he will end up losing money on when he eventually outgrows it - and he probably will outgrow it if he plans to have a family, because the large majority of properties on offer from DCC aren't family-friendly. They're almost all 1 or 2 bedroom apartments, so most people who buy them know they're going to end up selling somewhere down the line.

Calina

stovelid wrote:

Maybe because affordable housing is to help people find a home as opposed to offering cut-price property investments?

The key issue is home. Many properties which people have bought over the past few years have been pitstops at best, glorified as "first steps on the ladder". These are not homes.

Had more people actually sat down and considered what they need versus what they want, we might not necessarily have had the property bubble that we do. For example, I personally have gone nowhere near the affordable housing set up because ultimately none of the locations suited my life. Were I to get one and live in it, it still wouldn't be home to me.

It should not be about a house/property at any cost. When I hear about people commuting two hours to work, I query how much thought they put into the purchase.

Then I think, hell, if they hadn't, my rent would probably be higher. But you cannot condemn people for putting a little more thought into where they want to live. It's not a question of cherry picking, it's a question of actually seriously thinking about the commitment and not taking the first thing that comes along.

One point of view is farsighted, one is short.

stovelid

Dandelion6 wrote:

It sounds to me as though he's just being realistic and trying not to end up getting stuck with a property he will end up losing money on when he eventually outgrows it - and he probably will outgrow it if he plans to have a family, because the large majority of properties on offer from DCC aren't family-friendly. .

Maybe just wait until that family appears before investing in property or even wait until the current slump unfolds and places become more affordable.

No offense, but the idea of trading up through 2-3 places and making a profit to splash on somewhere nice is so ingrained at this stage that it's hard to shake.

Obviously there is no way to police this but I would prefer to see people who genuinely want a long term home have priority on affordable property.

SkepticOne

I think these schemes/initiatives are going to be more popular now that people don't expect capital appreciation. In the past, people were put off by the fact that they could not fully capitalise on gains and there were comparatively few applications.

Caychadh

Dandelion6 wrote:

My mortgage agreement with DCC says it isn't (unless I get prior written permission). The poster above was also told by DCC that it isn't. So on what basis are you saying that it is?

I was told that so long as you tell the council, it's fine to rent a room. Sorry if I was misinformed.

Dandelion6

stovelid wrote:

Obviously there is no way to police this but I would prefer to see people who genuinely want a long term home have priority on affordable property.

I think we would all prefer to see that, but the reality is that as long as the vast majority of properties on offer are 1 or 2 bedroom apartments, very few people are going to be looking to buy them for the long term.

The logical conclusion to what you are saying is that only people (like myself FWIW) who have no intention of ever needing a larger home would be able to participate in the current affordable housing scheme. The rest would have to wait around in the hope that someday the councils will get their act together and start providing family-friendly affordable homes, or in the hope that the market will collapse to such an extent that they don't need to go the affordable route at all. What if neither of those things happen? How long should they have to wait?

jdivision

I got an affordable unit in Fingal and there is no restriction on renting a room. I don't think DCC would have any legal basis to stop you from doing so, it's your property afterwards and if you are a single buyer buying a two-bed apartment it's obvious you will let out the other room.

anotherlostie

Dandelion6 wrote:

In fairness, most people "cherrypick" where they want to live. It's only smart to do so if you'll be living in a place for any length of time.

I wouldn't agree with you here. Two/ three generations ago, everyone who wanted to live in Blackrock could afford to do so. A generation ago only those with very good incomes would, otherwise people began to migrate away but in the vicinity. For this generation, only those who earn an exceptional wage, or have parents to buy for them can afford to buy from scratch in Blackrock.

If you are offered a place and refuse it, does this mean you go back to the bottom of a list? Do people refuse salary rises if it takes them out of the net while waiting for a place? (I'm just curious, and I guess a little resentful that I have to pay full whack while others don't and we both get the same thing).

stovelid

Dandelion6 wrote:

I think we would all prefer to see that, but the reality is that as long as the vast majority of properties on offer are 1 or 2 bedroom apartments, very few people are going to be looking to buy them for the long term.

If apartments are not suitable long term, why is it so important to buy them now...even to the extent of buying them in areas that the buyer doesn't want to live in?

Because - like the OP - the idea is to get on the "property ladder" and sell on the property later on.

I wasn't criticizing people moving on when they need more space. Just the fact that the OP was treating the purchase as it were a normally funded 'investment stop-gap' and not a scheme intended to provide homes for people who cannot afford them.

The fact is that in Ireland; in many of our minds, we all living in our final 'dream' house funded by previous, wise property investments.

Dandelion6

jdivision wrote:

I got an affordable unit in Fingal and there is no restriction on renting a room. I don't think DCC would have any legal basis to stop you from doing so, it's your property afterwards and if you are a single buyer buying a two-bed apartment it's obvious you will let out the other room.

The thing is that if you're buying on the Shared Ownership Scheme, it isn't entirely "your property afterwards". The Council still owns 50% of it and it's on that basis that they can deny you the right to rent out the other room.

Incidentally, I'm a single buyer who bought a two-bedroom. I didn't rent out the other room.

Dandelion6

stovelid wrote:

If apartments are not suitable long term, why is it so important to buy them now...even to the extent of buying them in areas that the buyer doesn't want to live in?

Because - like the OP - the idea is to get on the "property ladder" and sell on the property later on.

I wasn't criticizing people moving on when they need more space. Just the fact that the OP was treating the purchase as it were a normally funded 'investment stop-gap' and not a scheme intended to provide homes for people who cannot afford them.

I think the reason people feel they have to do this is because otherwise they would never be able to afford to buy. It's a lot easier to get a bank to give you a mortgage on that family-sized house if you have another property to offer up to them. This does not mean that they're looking to make a quick buck on the affordable unit, though. I think it's unfair to characterise people like the OP for that. They are still using the affordable scheme to get their own long-term housing which they otherwise couldn't afford to buy - they just have to do it in a longer, indirect way because family-sized homes aren't available under the scheme as it's currently being run.

I just think you're criticising people who are genuinely in need of housing for trying to make the most of the options available to them. Why not direct your criticism at the authorities (central and local) for not offering better options?

stovelid

Dandelion6 wrote:

They are still using the affordable scheme to get their own long-term housing which they otherwise couldn't afford to buy - they just have to do it in a longer, indirect way because family-sized homes aren't available under the scheme as it's currently being run.

In other words, using the scheme like I said.

To be honest Dandelion, I think that even if the scheme offered more family sized homes in 'not-so-desirable' areas, a lot of people would still turn them down in favour of good 'accumulators' in better areas.

Dandelion6 wrote:

Why not direct your criticism at the authorities (central and local) for not offering better options?

I agree.

There would hopefully be a much higher take up from those who genuinely want to use them as long term homes.

Dandelion6

stovelid wrote:

In other words, using the scheme like I said.

You suggested they were using the scheme out of greed. I don't agree, I think it's out of need. The important thing is that it's still a means of getting a home they couldn't otherwise afford - which is what the scheme is supposed to do.

To be honest Dandelion, I think that even if the scheme offered more family sized homes in 'not-so-desirable' areas, a lot of people would still turn them down in favour of good 'accumulators' in better areas.

Well there's one way to find out but it requires the Council to actually start offering family-sized homes. And they should be offering them in desirable areas, too. It's not good for Dublin for people to have to move out of the city when they want to have a family.

rikki2

Hi All, I am in the process of buying an Affordable apartment.
There is a 20% clawback.
If you sell within 10 years you have to pay back 20% of the Sale price. This diminishes by 2% for each year thereafter.
You CAN rent out a room. You cannot rent out the full property. It has to remain your PPR (principal place of residence).
You can remortgage the property but you have to pay the Council the original 20% of the house purchase price.

jellybeans

I was talking to a friend of mine who said that a solicitor said that what the councils are imposing isn't actually legal. It has been said that none of it would stand up in court. If for instance you have an affordable home and your family expands and you have to upsize and the council threaten to take the property off you well that isn't legal, anyone know?

jackal

jellybeans wrote: »

I was talking to a friend of mine who said that a solicitor said that what the councils are imposing isn't actually legal. It has been said that none of it would stand up in court. If for instance you have an affordable home and your family expands and you have to upsize and the council threaten to take the property off you well that isn't legal, anyone know?

The council dont and wont threaten to take the home off you. They can and will demand the clawback percentage though.

Irlbo

I have a young baby and a child on the way,I live in a tiny 1 bed apartment,we are on the affordable housing list because we cant afford to buy a house the tradional way of getting through a morgage,despite both working hard in decent paying jobs,we want to get a nice house at an affordable price so I can raise my family,makes me sick to read the OPs postAffordable housing is not for greedy cold hearted opportunists to buy houses to rent out to people like me who cant afford to buy a house,shame on you

unklerosco

Irlbo wrote: »

I have a young baby and a child on the way,I live in a tiny 1 bed apartment,we are on the affordable housing list because we cant afford to buy a house the tradional way of getting through a morgage,despite both working hard in decent paying jobs,we want to get a nice house at an affordable price so I can raise my family,makes me sick to read the OPs postAffordable housing is not for greedy cold hearted opportunists to buy houses to rent out to people like me who cant afford to buy a house,shame on you

If u think he's bad I know a guy who got an affordable apt, lived in it for a month and has been renting it out for the past 3-4 years.. He doesn't even live in the country anymore. He told the council last year via phone calls and letters and they never got back to him so he still has it...

jellybeans

jackal wrote: »

The council dont and wont threaten to take the home off you. They can and will demand the clawback percentage though.

have you heard of them actually doing this? Im not sure they do. I think it's the pits when people take advantage and abuse the system but I also feel the clause they have where you have to remain living in the property for 20 years a bit excessive. I have an affordable property and when buying i was single but hopefully someday I will have a family and partner etc. What if you both own an AH property??