Affordable Housing Clawback

Angel2016

I purchased a one bed apartment in D24 in 2008 via the affordable housing scheme with a clawback of 33%, I now have that apartment up for sale and it should sell for around 155K which means that as I paid 127K for it there is a profit now after speaking to the council on the sale no one really knew how the whole system is working because the department that did all the affordable housing is gone and the one person who did reply to me hadn't a clue but my solicitor said that he will sort all of this for me as I owe 114K on the mortgage he said that the council will be paid back money out of the difference between 155K & 127K and that he will try and negotiate a lower percentage to pay them back which would be good for me as I am then going to try buy a house.

I have already spoken to a broker and we know what we need to do but I am just waiting on the proceeds from this sale to go towards a deposit.
Has anyone else been in this situation recently?

superleedsdub

Try ring the loan accounts section of SDCC, I had to last year when selling my old apartment (slightly in negative equity so clawback didn`t apply) and once I reached the correct person (k.dunne or someone similar), I had to pay for the council valuation though.

I also found this on an old thread:

[quote="Let s say you purchase a new apartment (which has a market value of 200,000) for 160,000. We have therefore provided you with a discount of 20%.

Let s say that you then sell this property, within 10 years, for 300,000. SDCC will be due 20% of 300,000 (which is 60,000). It is as simple as that!

http://www.boards.ie/b/thread/2055516162

Like the person with the last reply on that thread, I always assumed that if you sold an affordable property for more than the discounted purchase price then you would be liable to pay the council the percentage discount that you received when purchasing on the difference between the purchase price and the selling price. In your case this would be:
33% of 155,000 - 127,000 = 9,240

Hopefully your solictor will be able to negotiate a lower value for you:-)

superleedsdub

I found this link from an email correspondence to propertypath.ie (the old affordable housing section in SDCC)

http://www.irishstatutebook.ie/eli/2000/act/30/section/99/enacted/en/html#partv-sec99

You would be liable for 62,992 by my calculations based on the percentage formula (40.64% of selling price) :-(

The_Conductor

Angel2016 wrote: »

I purchased a one bed apartment in D24 in 2008 via the affordable housing scheme with a clawback of 33%, I now have that apartment up for sale and it should sell for around 155K which means that as I paid 127K for it

If you paid 127k for the apartment, and received a 33% discount on it- the OMSP for the property when you purchased it- was 190k. This means if you now sell the property for 155k- there is a net loss of 35k on the OMSP- not a profit.

Angel2016 wrote: »

there is a profit now

No there isn't.
The sale price if you now sell it- is more than you paid for it- however, its less than the price you would have had to pay on the open market in 2008.......

Angel2016 wrote: »

after speaking to the council on the sale no one really knew how the whole system is working because the department that did all the affordable housing is gone and the one person who did reply to me hadn't a clue

Its a standard formula- on the sale of the property- the local authority gets an amount equal to the percentage discount you received at the outset from the sale price. So in your case- you received a 33% discount on the open market selling price. The proposed sale price is now 155k. You owe the council 33% of the 155k (presuming you get 155k)- which is roughly 52k- leaving you with 103-104k. On paying down the mortgage- of 114k- you have still a net debt of perhaps 10k.

This is why you have so few people who bought at bubble prices (2008 was still bubble prices) selling properties that they purchased under the affordable housing scheme- even with the recent price increases- and allowing for 10 years of mortgage repayments- its hard to be in a clear position. A price of 171k would have you fully pay back the local authority- and clear your mortgage in full. 155k- leaves you with a portional debt of in or around 10k...

If your aim is to come out clear in this equation- your target sale price is 171k.

Angel2016 wrote: »

but my solicitor said that he will sort all of this for me as I owe 114K on the mortgage he said that the council will be paid back money out of the difference between 155K & 127K and that he will try and negotiate a lower percentage to pay them back which would be good for me as I am then going to try buy a house.

With absolutely no disrespect intended towards your solicitor- he most certainly is no accountant. Also- DPER still have plenty of staff familiar with the scheme- as do the Department of the Environment, Community and Local Government. If the local authority are unable to handle the calculations (which there is absolutely no reason they wouldn't be- they were provided with a protected excel spreadsheet that the figures can be handily plugged into)- it gets booted to DECLG in the first instance- and then to DPER.......

It is in all honesty- a very simple calculation- its not hard to figure.

Angel2016 wrote: »

I have already spoken to a broker and we know what we need to do but I am just waiting on the proceeds from this sale to go towards a deposit.
Has anyone else been in this situation recently?

Try to get your solicitor to do a deal for you.
The letter of the law is that you owe a further 10k- if you sell the property for 155k.

The Clawback arrangement which underpinned the Affordable Housing scheme- was not designed to factor falls in house prices- into the equation. You have it in your head that your in positive territory- because you can sell the property on the open market for more than you paid for it. You did not however buy it on the open market- the clawback arrangement actually works for you- insofar as your exposure to the negative equity is limited- however, 155k is not going to cut it- to be clear here- you need a sale price of 171k- and even then- you have absolutely nothing towards a deposit- this is the price to be in the clear.

If you solicitor can take advantage of the obvious fact that the council don't know their arses from their elbows and have no idea how the scheme works- its on their head- I wouldn't enlighten them any- however- be prepared- if the scheme follows the rules as supplied by the Department- and uses the excel spreadsheet which was given to them- you owe them 10k after the sale at 155k- to clear the mortgage..........

If your solicitor can bamboozle them and leverage their ignorance of the scheme- well done to you- you're getting your money's worth from your solicitor..............

Angel2016

I don't think that is correct I did speak to someone in the council and everything has changed now the 33% will be paid out of the difference of 155K & 127K that I paid for it not on the whole amount the solicitor agreed with me on that as he has done them before he also said that the costs of the sale are deducted from it.

Angel2016

I'm so confused now because if its a case that I am going to owe 10K then I wont be selling it because the most you will get for it is 155K and that is at a push, I don't really think anyone knows how these affordable schemes are working now the old rules dont apply the council did tell me that and they did say that the percentage is taken from the difference between 155K & 127K not from the 190K.

I really don't know whats going on I will have to speak to the council again and the solicitor and if that is the case it will be taken off the market asap

Angel2016

Also I have rang SDCC several times they dont have loads of people who are familar with the scheme there is actually just one person in there who is dealing with the calls and no one else.

Angel2016

This is on a website set up to help people understand the clawback system not that is has been abolished.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.

So to me this looks like I sell for 155K less price paid 127K and council get 28K its still not worth selling.

vandriver

Angel2016 wrote: »

This is on a website set up to help people understand the clawback system not that is has been abolished.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.

So to me this looks like I sell for 155K less price paid 127K and council get 28K its still not worth selling.

There is no incentive for you to sell it at one cent over 127k.At that price,you would only break even,after fees.

intheclouds

Angel2016 wrote: »

This is on a website set up to help people understand the clawback system not that is has been abolished.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.

So to me this looks like I sell for 155K less price paid 127K and council get 28K its still not worth selling.

According to the examples on that website you should not sell for more than 127k. Anything you get over that goes to the council.

Of course the particular scheme you bought it under may have some specific set of rules. Do you know what the scheme was called?

Angel2016

intheclouds wrote: »

According to the examples on that website you should not sell for more than 127k. Anything you get over that goes to the council.

Of course the particular scheme you bought it under may have some specific set of rules. Do you know what the scheme was called?

It's just the South Dublin County Council Affordable Housing Scheme and when you go sale agreed they send out someone to value the place so if you try sell for less than what its really valued at you will be caught out its a no win situation really and you can sell it unless they issue their valuation.
I am taking it off the market today its too much hassle and very disappointing I will be stuck renting forever now.

intheclouds

Angel2016 wrote: »

It's just the South Dublin County Council Affordable Housing Scheme and when you go sale agreed they send out someone to value the place so if you try sell for less than what its really valued at you will be caught out its a no win situation really and you can sell it unless they issue their valuation.
I am taking it off the market today its too much hassle and very disappointing I will be stuck renting forever now.

How does it make any difference to you really though?

If you sell it for 127k, you pay off your outstanding mortgage of 114k and you then have 13k left over.

If you sell it for 155k, you pay off your outstanding mortgage of 114k and you then have 13k left over - the council gets the difference between 127k and 155k.

So you end up in the same position.

Angel2016

intheclouds wrote: »

How does it make any difference to you really though?

If you sell it for 127k, you pay off your outstanding mortgage of 114k and you then have 13k left over.

If you sell it for 155k, you pay off your outstanding mortgage of 114k and you then have 13k left over - the council gets the difference between 127k and 155k.

So you end up in the same position.

They won't let you sell it for less than the market value its not in their interest.
I just spoke to someone in the council and they said that as the market value is now 155K and not 190K that is was in 2008 the clawback percentage has dropped to 20% they said that you will pay 20% on the difference between 155K & 127K less your costs for selling.

CGT has to be paid and also NPPR which I knew, they said they don't aim to have anyone left in debt because of the affordable housing scheme so you would never be left owing money after a sale.
They said to just let it go sale agreed get the council valuation, see what your clawback works out at and if you dont want to sell take it off the market so that is what I will do.

intheclouds

Angel2016 wrote: »

They won't let you sell it for less than the market value its not in their interest.
I just spoke to someone in the council and they said that as the market value is now 155K and not 190K that is was in 2008 the clawback percentage has dropped to 20% they said that you will pay 20% on the difference between 155K & 127K less your costs for selling.

CGT has to be paid and also NPPR which I knew, they said they don't aim to have anyone left in debt because of the affordable housing scheme so you would never be left owing money after a sale.
They said to just let it go sale agreed get the council valuation, see what your clawback works out at and if you dont want to sell take it off the market so that is what I will do.

Get the above in writing because it is different to what is stated on the website you linked to.

vandriver

Angel2016 wrote: »

They won't let you sell it for less than the market value its not in their interest.
I just spoke to someone in the council and they said that as the market value is now 155K and not 190K that is was in 2008 the clawback percentage has dropped to 20% they said that you will pay 20% on the difference between 155K & 127K less your costs for selling.

CGT has to be paid and also NPPR which I knew, they said they don't aim to have anyone left in debt because of the affordable housing scheme so you would never be left owing money after a sale.
They said to just let it go sale agreed get the council valuation, see what your clawback works out at and if you dont want to sell take it off the market so that is what I will do.

You mention cgt and nppr.Are you living in the property?

The_Conductor

Angel- just talking to an officer in Fingal today.
She said shes done a handful of these type transactions this year (5).
In all cases- they aim to clear the debt associated with the property- so you're not actually worse off- i.e. you can sell and clear all the debt- at current market prices. This is not what the official calculation is- it is however how Fingal are administering it (I don't know anyone in South Dublin Co. Co.)

If you can clear the o/s debts- and are happy with this- is this a runner?

Also- it sounds like you've let out the property- and are not living in it. This obviously was not the intention of the scheme. Are you renting elsewhere? Is there any way at all that you could move back into the affordable property and live there yourself?

You don't really have anything to loose selling the property- only you're not going to have a lumpsum over from the sale- which I gather you thought you'd have.

As I mentioned last night- there is a calculation which circulated to all local authorities back in the day (someone even posted a copy of it on boards at one stage- I'll see if I can dig it out). It never took into account falls in property values- which is where a lot of people on this scheme are being caught out.

The impetus now seems to be not to leave people in debt if they dispose of these properties- which may suit some people (but obviously not others).

Any chance at all you could use the property yourself?

vandriver

You say that you are aware that NPPR needs to be paid.This implies that you have not paid it so far.If that's the case,be sitting down before working out how much you owe.
(If your liability is from 2009 onwards,its over 7k!)

Angel2016

intheclouds wrote: »

Get the above in writing because it is different to what is stated on the website you linked to.

Yeah I will be I think each case varies is what I was told my next door neighbor also sold hers a month ago she works for the council so said that is how hers worked too but I will be double checking everything from clawback to NPPR to water charges.

intheclouds

Angel2016 wrote: »

Yeah I will be I think each case varies is what I was told my next door neighbor also sold hers a month ago she works for the council so said that is how hers worked too but I will be double checking everything from clawback to NPPR to water charges.

Were you not living in the property?

Angel2016

vandriver wrote: »

You say that you are aware that NPPR needs to be paid.This implies that you have not paid it so far.If that's the case,be sitting down before working out how much you owe.
(If your liability is from 2009 onwards,its over 7k!)

No I just registered I owe € 750.00 for 2013 as I lived in the property from 2008 - 2012 thank god so I have to pay that and get a cert from the council to say its paid before close of sale.
I actually only learned of the NPPR in 2015 when a friend was getting a divorce and had three properties with her ex and she told me about it and I had never heard it before, my LPT is all paid up but just didn't know about this tax which I think was the case for alot of people.
I will pay it though no worries there.

Angel2016

The_Conductor wrote: »

Angel- just talking to an officer in Fingal today.
She said shes done a handful of these type transactions this year (5).
In all cases- they aim to clear the debt associated with the property- so you're not actually worse off- i.e. you can sell and clear all the debt- at current market prices. This is not what the official calculation is- it is however how Fingal are administering it (I don't know anyone in South Dublin Co. Co.)

If you can clear the o/s debts- and are happy with this- is this a runner?

Also- it sounds like you've let out the property- and are not living in it. This obviously was not the intention of the scheme. Are you renting elsewhere? Is there any way at all that you could move back into the affordable property and live there yourself?

You don't really have anything to loose selling the property- only you're not going to have a lumpsum over from the sale- which I gather you thought you'd have.

As I mentioned last night- there is a calculation which circulated to all local authorities back in the day (someone even posted a copy of it on boards at one stage- I'll see if I can dig it out). It never took into account falls in property values- which is where a lot of people on this scheme are being caught out.

The impetus now seems to be not to leave people in debt if they dispose of these properties- which may suit some people (but obviously not others).

Any chance at all you could use the property yourself?

Thanks for your help the property is a one bed apartment and I have animals cats and dog so can't go back there with them we rent ourselves for 1250 and LL knows about animals and is happy enough as we are good tenants.

The rules did say no renting out of one beds but we had alot of trouble with a bar that was across from us from 2008-2012 and we ended up going to court with them over the noise the council were involved in all this process as they had given them planning permisson and they were useless basically so in July 2012 I couldn't take it anymore and moved out I informed them why I was moving due to lack of sleep and quality of life and they said okay just don't shout it from the roof tops, alot of people in my building did that I even had a guy from the council come to view the place to rent it.

Angel2016

intheclouds wrote: »

Were you not living in the property?

I lived there from 2008-2012 and then moved out and rent a house myself down the road.

superleedsdub

Did you get permission from SDCC to rent out the property? The reason I ask is that if you did you would have had to stop claiming any mortgage interest relief if you were a first time buyer. You could then have an audit from revenue in the future.....

EDIT: just saw that you didn`t receive permission....

Angel2016

superleedsdub wrote: »

Did you get permission from SDCC to rent out the property? The reason I ask is that if you did you would have had to stop claiming any mortgage interest relief if you were a first time buyer. You could then have an audit from revenue in the future.....

Yes I got permission to rent it out because of the situation with the noise from the pub across from which was meant to only be a restaurant.
I stopped claiming mortgage relief straight away and yes I was a first time buyer, I registered just now for my NPPR tax and I owe € 750.00 on that, LPT paid up and CGT can be paid early next year if needs be I rang the revenue on that.

The apartment next door to me which was a two bed she paid the clawback based on the difference between what she paid for it and what she sold it for and as the market price had dropped so did the clawback so where originally hers was 46% it dropped slightly for her I worked it out and my clawback would now be at 20% as the apt was valued at 190K in 2008 and is now around 150K its all very confusing I really do wish there was clear guidance on what is what on the actual council sites, I am just glad I got a mortgage with a bank and not the council as I see alot of people that did that and are unhappy.

Angel2016

I've messaged <snip> of SDCC with all the details and asked her to call me to discuss so we will see what she says.

billyhead

Can I just clarify another example of the Affordable housing scheme and this scenario.

OMV (open market value) of house at time of purchase €262,000
Purchase price €167,000
Current mortgage left €35000
Current OMV= €225,000
Clawback = 37%

If house is sold at current market value then the council is owed €83, 259 & €35,000 i.e remaining mortgage and the rest of the sale goes to the owner. Is this correct and the way its calculated. After year 10 the clawback reduces by 10% thus next year if its year 11 the clawback is around 33%?

The_Conductor

billyhead wrote: »

Can I just clarify another example of the Affordable housing scheme and this scenario.

OMV (open market value) of house at time of purchase €262,000
Purchase price €167,000
Current mortgage left €35000
Current OMV= €225,000
Clawback = 37%

If house is sold at current market value then the council is owed €83, 259 & €35,000 i.e remaining mortgage and the rest of the sale goes to the owner. Is this correct and the way its calculated. After year 10 the clawback reduces by 10% thus next year if its year 11 the clawback is around 33%?

Hey Billy-

Yes- the clawback was structured so the full 100% was due for the first 10 years- thereafter the percentage of the clawback reduced by 10% of the percentage per year- so that if you sold in year 20 there would be no clawback due to the local authority. In your case- if you received a discount of 37% on the assessed open market selling price of the property at the outset- you would owe a clawback of 37%-3.7% in year 11- i.e. 33.3%......

In your example:

OMV (open market value) of house at time of purchase €262,000
Purchase price €167,000
Current mortgage left €35000
Current OMV= €225,000
Clawback = 37%

If you sell the property for 225,000 now- you owe the local authority 37% of the 225,000 = 83,250 + the o/s mortgage of 35,000 = 118,250 (you may also have a CGT liability with Revenue- which you have to address separately).

So- you have a lumpsum 107k- over (+ an assorted number of transaction and sundry bills to settle- including a possible Revenue bill).

All-in-all- its not a bad position to be- primarily because you've managed to pay off so much of the mortgage and the current market value has recovered to a reasonable extent...........

Its a nice deposit to have for buying elsewhere- however- the flipside of the coin in all this- is the scarcity factor- supply is pretty non-existent..........

If I were in your case- and had no particular imperative to move- I'd hang tight- and let the percentage clawback dwindle while I assessed my options over the next few years.

billyhead

The_Conductor wrote: »

Hey Billy-

Yes- the clawback was structured so the full 100% was due for the first 10 years- thereafter the percentage of the clawback reduced by 10% of the percentage per year- so that if you sold in year 20 there would be no clawback due to the local authority. In your case- if you received a discount of 37% on the assessed open market selling price of the property at the outset- you would owe a clawback of 37%-3.7% in year 11- i.e. 33.3%......

In your example:

OMV (open market value) of house at time of purchase €262,000
Purchase price €167,000
Current mortgage left €35000
Current OMV= €225,000
Clawback = 37%

If you sell the property for 225,000 now- you owe the local authority 37% of the 225,000 = 83,250 + the o/s mortgage of 35,000 = 118,250 (you may also have a CGT liability with Revenue- which you have to address separately).

So- you have a lumpsum 107k- over (+ an assorted number of transaction and sundry bills to settle- including a possible Revenue bill).

All-in-all- its not a bad position to be- primarily because you've managed to pay off so much of the mortgage and the current market value has recovered to a reasonable extent...........

Its a nice deposit to have for buying elsewhere- however- the flipside of the coin in all this- is the scarcity factor- supply is pretty non-existent..........

If I were in your case- and had no particular imperative to move- I'd hang tight- and let the percentage clawback dwindle while I assessed my options over the next few years.

Thanks The Conductor. So obviously the best thing to do would be to remain as long as possible if no real need to move. Once the 20 years are up their would be no ties to the county council.

The_Conductor

billyhead wrote: »

Thanks The Conductor. So obviously the best thing to do would be to remain as long as possible if no real need to move. Once the 20 years are up their would be no ties to the county council.

Exactly........
Its structured to encourage long term ownership- and the intention was specifically to discourage flipping........

vandriver

The_Conductor wrote: »

Hey Billy-

Yes- the clawback was structured so the full 100% was due for the first 10 years- thereafter the percentage of the clawback reduced by 10% of the percentage per year- so that if you sold in year 20 there would be no clawback due to the local authority. In your case- if you received a discount of 37% on the assessed open market selling price of the property at the outset- you would owe a clawback of 37%-3.7% in year 11- i.e. 33.3%......

In your example:

OMV (open market value) of house at time of purchase €262,000
Purchase price €167,000
Current mortgage left €35000
Current OMV= €225,000
Clawback = 37%

If you sell the property for 225,000 now- you owe the local authority 37% of the 225,000 = 83,250 + the o/s mortgage of 35,000 = 118,250 (you may also have a CGT liability with Revenue- which you have to address separately).

So- you have a lumpsum 107k- over (+ an assorted number of transaction and sundry bills to settle- including a possible Revenue bill).

All-in-all- its not a bad position to be- primarily because you've managed to pay off so much of the mortgage and the current market value has recovered to a reasonable extent...........

Its a nice deposit to have for buying elsewhere- however- the flipside of the coin in all this- is the scarcity factor- supply is pretty non-existent..........

If I were in your case- and had no particular imperative to move- I'd hang tight- and let the percentage clawback dwindle while I assessed my options over the next few years.

This is not how it is described on the housing website.

Angel2016

Hopefully I will get a call today from the person in SDCC so I will update this post and let everyone know what the situation is with myself and see does that help anyone.

Angel2016

So here is an update from today I spoke to a person in SDCC a very rude one at that and as soon as I mentioned the affordable housing claw-back he started trying to over speak me and kept interrupting me he said that the clawback is null & void and that anything over the price you paid for it goes to them so if my apartment sells for 155K and I paid 127K they get the difference ie. 28K !

I questioned him on it and he said look that is how it is you signed an agreement for the clawback and this way is more beneficial to you because other wise it would have been 33% of the whole sale price which I said that could not be correct because anything below 127k I would have paid out of my own pocket to a mortgage company so why would the council benefit from it, I told him that I was under the impression that it was 33% of the profits which would work out at just under 10K and he said no forget about that so I said I didnt remember signing any contract agreeing to 33% of the whole sale price which I honestly didn't so am going to ask for a copy of that contract.
He was very unhelpful and I am really annoyed at his attitude as all I was looking for was some help on the situation.
With all this taken into account after EA fees, maintenance fees, solicitor fees coming out of the balance which I would have received ie...the difference between 127K and what I owe which is 114K its not worth selling the place.

vandriver

For you to be any better off,the sale price would have to be over 191k.

Angel2016

vandriver wrote: »

For you to be any better off,the sale price would have to be over 191k.

It actually doesn't make a difference because according to the council anything over 127K goes to them regardless of whether its 155K or 191K they get it all as he says the clawback is null & void but I have asked for all paperwork for this and said I will get my solicitor to check this out because to me it doesn't make sense.

Turkish1

Angel2016 wrote: »

So here is an update from today I spoke to a person in SDCC a very rude one at that and as soon as I mentioned the affordable housing claw-back he started trying to over speak me and kept interrupting me he said that the clawback is null & void and that anything over the price you paid for it goes to them so if my apartment sells for 155K and I paid 127K they get the difference ie. 28K !

I questioned him on it and he said look that is how it is you signed an agreement for the clawback and this way is more beneficial to you because other wise it would have been 33% of the whole sale price which I said that could not be correct because anything below 127k I would have paid out of my own pocket to a mortgage company so why would the council benefit from it, I told him that I was under the impression that it was 33% of the profits which would work out at just under 10K and he said no forget about that so I said I didnt remember signing any contract agreeing to 33% of the whole sale price which I honestly didn't so am going to ask for a copy of that contract.
He was very unhelpful and I am really annoyed at his attitude as all I was looking for was some help on the situation.
With all this taken into account after EA fees, maintenance fees, solicitor fees coming out of the balance which I would have received ie...the difference between 127K and what I owe which is 114K its not worth selling the place.

Without getting too complex I would have thought it is quite straight forward.

You bought in 2008 for €127k which was 67% of the market value. Therefore the market value was €190k. Council contribution of €53k.

If you sell within 10years you are required to pay back the council in full.

So if you sell for €155k, you will pay off mortgage of €114k, costs - say €6k and the remaining 35k will go to the council and they will not chase you for the balance of €18k (€53k original council contribution less €35k paid back on sale).

Correct me if any of the above details are correct or if there is some other reason why you believe you should pay back approx €10k on an original agreement worth €53k?

Angel2016

Turkish1 wrote: »

Without getting too complex I would have thought it is quite straight forward.

You bought in 2008 for €127k which was 67% of the market value. Therefore the market value was €190k. Council contribution of €53k.

If you sell within 10years you are required to pay back the council in full.

So if you sell for €155k, you will pay off mortgage of €114k, costs - say €6k and the remaining 35k will go to the council and they will not chase you for the balance of €18k (€53k original council contribution less €35k paid back on sale).

Correct me if any of the above details are correct or if there is some other reason why you believe you should pay back approx €10k on an original agreement worth €53k?

I am getting my solicitor to look at it all, I am not trying to scam the council as your post suggests but I can tell you the council where given that building for little or nothing because they gave planning permission to Liam Carroll to build everything else and he then went bust hence all the property except this building going to NAMA.

What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else.

vandriver

"What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else."

So clearly this deal(ie payback of 155-127) is a better outcome for you.

Angel2016

vandriver wrote: »

"What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else."

So clearly this deal(ie payback of 155-127) is a better outcome for you.

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

Jasper79

Angel2016 wrote: »

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

The proceeds from a sale would not exclude your mortgage. its the sales price minus sales costs . your mortgage is irrelevant in that regard. if that is was the agreement was for.

Graham

Angel2016 wrote: »

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

33% of the proceeds of the sale is about €51,000.

intheclouds

If you sold it and the council take the difference between 127k and 155k then you are still doing ok arent you?

You get 127k, which pays off your outstanding mortgage of 114k, plus costs and maybe leaves you with 10k after it all?

Why would you not go for that or am I missing something?

Angel2016

Graham wrote: »

33% of the proceeds of the sale is about €51,000.

The proceeds of the sale is 41K so 33% of that is € 13,530.00

Net proceeds is calculated by taking the sale price of a home and subtracting all selling costs. Typical selling costs include: Payoff of existing mortgages.

Approximately market value as of July 2016 = € 155K

Mortgage outstanding = € 114K
Difference € 41K
So its 33% of that

and the mortgage balance still gets paid off.

Jasper79

Angel2016 wrote: »

The proceeds of the sale is 41K so 33% of that is € 13,530.00

Net proceeds is calculated by taking the sale price of a home and subtracting all selling costs. Typical selling costs include: Payoff of existing mortgages.

Approximately market value as of July 2016 = € 155K

Mortgage outstanding = € 114K
Difference € 41K
So its 33% of that

and the mortgage balance still gets paid off.

No it doesn't Your mortgage has nothing to do with Sales proceeds, as above its sale price less sales costs

Angel2016

Jasper79 wrote: »

No it doesn't

I'm ending this thread because everyone is posting different opinions and posts and really its gone off topic now because I was looking for someone else who has been in this situation and could help me a little and that has not happened and prob wont because each person's case is individual and I will wait to see what the solicitor says.

Jasper79

Angel2016 wrote: »

I'm ending this thread because everyone is posting different opinions and posts and really its gone off topic now because I was looking for someone else who has been in this situation and could help me a little and that has not happened and prob wont because each person's case is individual and I will wait to see what the solicitor says.

I'm not posting opinion it's fact, you can easily google a definition of sales proceeds, but as you don't remember signing contract, are you sure what terms are.

As you've been advised if the terms are 33% of sales proceeds, you need to exclude your mortgage from your calculations.

Jasper79

Taken from the housing agency website link _http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home
See scenario 4 for your case :

xample of How the Clawback Works
John and Mary bought an affordable home. The market value of this property was €280,000, and they bought it at an affordable price of €196,000. So, the market value discount to John and Mary, which is known as the clawback, was 30%.

Scenario 1 – if they sell the home for less than the affordable price
If the market value of the home decreases below the original affordable price of the home, and the home is sold at this lower price, then no clawback is payable to the local authority.
Scenario 2: if they sell after 20 years
If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback to the local authority as the clawback charge is discharged after 20 years. However, they would have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.
Scenario 4 – if the market value of the affordable home increases:
If John and Mary sell their home for a higher amount than the original market value for example, €330,000 after five years, the clawback would be €99,000 (30% of €330,000). They would have to pay back €99,000 to the local authority. They would also have to repay any money owed to the mortgage lender to clear their mortgage.

intheclouds

Jasper79 wrote: »

Taken from the housing agency website link _http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home
See scenario 4 for your case :

xample of How the Clawback Works
John and Mary bought an affordable home. The market value of this property was €280,000, and they bought it at an affordable price of €196,000. So, the market value discount to John and Mary, which is known as the clawback, was 30%.

Scenario 1 – if they sell the home for less than the affordable price
If the market value of the home decreases below the original affordable price of the home, and the home is sold at this lower price, then no clawback is payable to the local authority.
Scenario 2: if they sell after 20 years
If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback to the local authority as the clawback charge is discharged after 20 years. However, they would have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.
Scenario 4 – if the market value of the affordable home increases:
If John and Mary sell their home for a higher amount than the original market value for example, €330,000 after five years, the clawback would be €99,000 (30% of €330,000). They would have to pay back €99,000 to the local authority. They would also have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 4 is not what the OP is in. The market value has decreased.

It was 190k. Now its 155k.

Heffoman

I am currently in the same position and have gone sale agreed on my apartment. I and my solicitor have checked this quiet thoroughly and have verified it with Fingal County Council who we bought the property off.

Basically anything you get above the price you paid for your apartment is clawbacked by the local authority. So in my case the affordable price I bought the apartment at was €154,000. If the sale goes ahead anything I get above €154,000 is clawbacked by Fingal.

The only way you can make anything on this property is to keep it for the 20 years and sell it or sell it for more than its original market value. I.e in my case the original market value was approx €300k. So I would have to sell it over that price to make a profit. The balance I sell it over €300k would then be subject to my clawback percentage (33% I believe in your case or 50% for my property). As you can imagine that ain't ever going to happen.

I hope this helps. I like others had presumed I would make some profit on the balance above the affordable price if I sold it for that but no that is not how it works.

Angel2016

Heffoman wrote: »

I am currently in the same position and have gone sale agreed on my apartment. I and my solicitor have checked this quiet thoroughly and have verified it with Fingal County Council who we bought the property off.

Basically anything you get above the price you paid for your apartment is clawbacked by the local authority. So in my case the affordable price I bought the apartment at was €154,000. If the sale goes ahead anything I get above €154,000 is clawbacked by Fingal.

The only way you can make anything on this property is to keep it for the 20 years and sell it or sell it for more than its original market value. I.e in my case the original market value was approx €300k. So I would have to sell it over that price to make a profit. The balance I sell it over €300k would then be subject to my clawback percentage (33% I believe in your case or 50% for my property). As you can imagine that ain't ever going to happen.

I hope this helps. I like others had presumed I would make some profit on the balance above the affordable price if I sold it for that but no that is not how it works.

Thanks yes you are very good and clear in your explanation, I have decided to take it off the market and rent it out again at the going rate now and will once again become a reluctant LL and just be stuck renting myself.

Jasper79

intheclouds wrote: »

Scenario 4 is not what the OP is in. The market value has decreased.

It was 190k. Now its 155k.

Ah okay apologies OP.

Heffoman

Angel2016 wrote: »

Thanks yes you are very good and clear in your explanation, I have decided to take it off the market and rent it out again at the going rate now and will once again become a reluctant LL and just be stuck renting myself.

Unfortunately I could be doing the same myself. It was a bit of a shock when I found out what way the clawback worked. But at the end of the day I couldn't complain much as I got the apartment at a decent price.

Best of luck anyway.