Affordable Housing - Clawback % clarification

[Dundhoone]

Folks,

On researching the legislation on affordable housing - and using the formula contained therein I have found that if you sell from 1 -10 years you can only get back the capital amount you originally put in - the local authority get the full amount of any capital increase on the whole property (not just on their original percentage input) in that time.

Of course after ten years this amount decreases by 10% a year, even so this is fairly restrictive from the point of view of people who may have 3 or four kids after obtaining a 2 or 3 bed property this way.

Is there some way of buying out the councils percentage or have I misinterpreted the formula?

 

[Sherman]

The formula on the Dublin City Council website is:

Y x 100%
Z

Where Y = Discount received by the person when they originally bought the affordable house, and Z = current market price.

Example from their info booklet:

House price = €160k
Affordable scheme price = €127k
% Discount received = 20.63%

Sale after say 5 years if current market value €200k: City council gets back their 20.63% on the whole market price i.e. they get back €41,260.

So they don't get the full price increase - merely the same percentage of it as the percentage discount you received in buying under the Affordable Housing Scheme.

 

[Dundhoone]

if that was supposed to be

Y x 100​

______​

Z​

where—
Y is the difference between the market value of the house or land at the time of sale to the person and the price actually paid, and
Z is the market value of the house at the time of sale to the person.

Thats the one i'm using. Basically if you've put in 150,000 year 1 thats all you can get out if you sell up from year 1 to year 10. The council get all other capital appreciation on the property as well as their stake back.

Hardly worth it for the 15 - 20% they give you off the market value if you are unsure whether or not you'll need/be able to afford a bigger place further down the line.

 

[Sherman]

Em no, you're wrong.

Did you not read my post at all?

In the example I gave, which came off the DCC website, you would get €200k minus €41,260 (representing their 20.63%) giving you the remainder i.e. €158,740.

You will therefore have made a profit of €31,740 - you contributed only €127k don't forget.

So they don't take all the capital increase.

Besides, if you don't like it, you don't have to apply for it. Leave it for someone who'll actually appreciate it.

 

[Dundhoone]

hehehe
Guess you posted while I was typing. My sisters going for it, so I'm just helping sus it out with her. I couldnt find an example - the galway websites are a bit skimpy on info. Thanks for the help Sherman.

 

[shnaek]

A friend of mine in Offaly has one of these. He was asking if it's possible to rent a room in his as he's having trouble paying the mortgage. I told him to call in to Citizens Advice but he's reluctant. Does anyone know the situation with this, or does it depend on the county council?

 

[ClubMan]

I told him to call in to Citizens Advice but he's reluctant.

Why? Their service is confidential if that's the concern.

 

[shnaek]

That's what I tell him. But he says it's a small town and people there might know him. I told him to use the confidential phone line. I've used it many times myself and found it great.

 

[ClubMan]

But he says it's a small town and people there might know him.

He could always use a vocoder if he's that paranoid.

 

[River]

A friend of mine in Offaly has one of these. He was asking if it's possible to rent a room in his as he's having trouble paying the mortgage. I told him to call in to Citizens Advice but he's reluctant. Does anyone know the situation with this, or does it depend on the county council?

i looked into this a few years ago and tried to suss out a few things before deciding what to do.

basically i was told that they dont keep tabs as such on the house after you take out mortgage, apart from if you sell of course. so in theory you could even rent out place. you wont get this in writing and im sure its frowned upon but there is nothing stopping you from doing this. best be sure to have a solicitor review your contracts though as different councils may have different parameters as to what you are/are not allowed to do.

my opinion would be then that renting a room is absolutely no problem. after all they'l want you to make repayments so if you can get any help im sure it'l be fine.

 

[shnaek]

Thanks for that, River. I'll pass on your comments.