Affordable housing scheme - Clawback query

MetHerInSolas

I am struggling to figure out how much clawback I would pay if I sold my apartment today, the following are my details:

• I bought an apartment under the affordable housing scheme in 2007.
  In 2007 the market price was €320,000 and in 2007 I paid €190,000 for my apartment.

• Today, I want to try and sell my apartment.
  I have got valuations from 3 different auctioneers and I have come up with a current valuation of €180,000.
  Current my mortgage is €160,000.

• How much clawback would I have to pay if I sold for €180,000?

Michael D Not Higgins

The valuation is less than what you paid for it, so there's no clawback.

https://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home

RobbieTheRobber

Hi Metherinsolas, as you would be selling below the price you paid for the property the clawback would be nothing in your case. You would only be required to pay clawback on the difference between purchase price and sale price where that difference is a positive amount.

I have quoted the section from the citizens information and highlighted the relevant line.
Link to citizens info: http://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/affordable_housing.html

If you bought an affordable home

If you sell your house within 20 years, you will have to pay the local authority a percentage of the proceeds of the sale - known as 'clawback'. This percentage is expressed as the percentage difference between the sale price and the market value of the house. This amount will be reduced by 10% each year after you have owned your home for 10 years. So, if you sell your home after 20 years, you will not have to pay any clawback to the local authority.

The market value at the time of selling your affordable home is used to calculate the amount of clawback due to the local authority. If the gap between the original sale price and market value has narrowed, the amount due to the local authority will also reduce. If the proceeds of the sale of your affordable home are below the initial price actually paid, you will not be liable to pay the local authority a percentage of the proceeds of the sale.

MetHerInSolas

To confirm if I was to sell for €200,000 I would have to pay clawback on €10,000 (200,000 - 190,000) and the clawback % would be 60% as the original market price was €320,000 and what I originaly paid was €190,000.

So the total Clawback I would pay is €6,000 on a €200,000 sale?

The_Morrigan

MetHerInSolas wrote: »

I am struggling to figure out how much clawback I would pay if I sold my apartment today, the following are my details:

• I bought an apartment under the affordable housing scheme in 2007.
  In 2007 the market price was €320,000 and in 2007 I paid €190,000 for my apartment.

• Today, I want to try and sell my apartment.
  I have got valuations from 3 different auctioneers and I have come up with a current valuation of €180,000.
  Current my mortgage is €160,000.

• How much clawback would I have to pay if I sold for €180,000?

Please go talk to the council that runs your scheme - we've found over the course of various threads here that the rules are not standard across the board.
You cannot take the advice of anyone here as gospel.

Get onto the council and seek professional advice - ie a solr.

Michael D Not Higgins

MetHerInSolas wrote: »

To confirm if I was to sell for €200,000 I would have to pay clawback on €10,000 (200,000 - 190,000) and the clawback % would be 60% as the original market price was €320,000 and what I originaly paid was €190,000.

So the total Clawback I would pay is €6,000 on a €200,000 sale?

In that instance your clawback is between the price you paid and the original market price and the entire 10k would go to the council. I would take The Morrigan's advice though and check with the council.

eimsRV

The clawback is based on the discount you received which was 40%.
You then pay the council back 40% of the profit you make, so in this case if you sold the property for 200K there would be a profit of 10K, you would owe the council 4K.
After ten years the clawback reduces by 10% so in year 11 the clawback would be 36% and so forth. After 20 years no clawback is owed to the council.

I agree you should speak to your local county council as different areas had different rules.

Michael D Not Higgins

eimsRV wrote: »

The clawback is based on the discount you received which was 40%.
You then pay the council back 40% of the profit you make, so in this case if you sold the property for 200K there would be a profit of 10K, you would owe the council 4K.
After ten years the clawback reduces by 10% so in year 11 the clawback would be 36% and so forth. After 20 years no clawback is owed to the council.

I agree you should speak to your local county council as different areas had different rules.

No it's the entire 10k, according to Scenario 3
https://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home

eimsRV

Michael D Not Higgins wrote: »

No it's the entire 10k, according to Scenario 3
https://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home

That's interesting. I purchased under the affordable home initiative and was advised otherwise by my solicitor. Refer to section 3b.

http://www.irishstatutebook.ie/2002/en/act/pub/0009/sec0009.html#partii-sec9

Dandelion6

eimsRV wrote: »

That's interesting. I purchased under the affordable home initiative and was advised otherwise by my solicitor. Refer to section 3b.

http://www.irishstatutebook.ie/2002/en/act/pub/0009/sec0009.html#partii-sec9

It's complicated but if you do the calculation in that equation, and then apply subsection (d), you will see that Michael D is correct.

eimsRV

Then there is no incentive for the seller to look for a price higher then what they paid ... unless of course it is higher than the original market value of that house.