Clawback on affordable housing

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confused AH

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I have a query if anyone can help me. I purchased a property in dublin under the affordable housing scheme using a shared ownership loan and i understood that if i sold the property i was liable for the clawback. However i went to remortage my property buying out the shared ownership loan for a normal mortgage but the council told me to buy out the shared ownership loan i would have to pay the clawback even though i am not selling the property. I knew nothing about this is there anything i can do.
 
I think this is correct, otherwise you could buy them out at the original price and then sell it on without any clawback implications. The fact is that they own half the house, so in essence any price rise since you bought it is half theres. To counter this you must pay the clawback so it becomes like you paid market value at the time (less however many years you were there or whatever).

I am not 100% on this but i guess the council should know, maybe try someone else in there for confirmation. This should definitely have been something factored in before buying. I think alot of people are getting into the joint ownership schemes without reading all the small print in the hopes of making a few bucks of capital appreciation.

If you are not selling what is the rush to buy the council out?
 
If you buy an affordable house using shared ownership and want to re-mortgage you should check this with the council as I know someone in the same boat and they were told to check the legislation - Housing Act 2002!! he found out that if he bought out the council's interest (remortgage) he would have to pay back the clawback. Hope this helps....
 
yes unfortunately you do have to pay the clawback if you would like to remortgage i enquired about this a few years ago as i bought a house 4 years ago through fingal county council. I voiced my concerns about the unfairness of this to john o'connor, affordable homes partnership by email over 2 weeks ago and never received a reply.
 
It depends on the council area. So for eg if you buy a house with Kerry county council you can remortgage without paying back the clawback. The problem is that the council, quite rightly, insist that the new financial institution enters an agreement with them that in the event of a forced repossession and sale by them because of non payment of mortgage that they will pay the claw back to the council. Where the difficulty arises is that so far it seems the financial institutions are reluctant to enter into these agreements. I feel quite strongly about the matter in that I think it is ultimately very unfair if a purchaser of an affordable house cannot remortgage to take advantage of lower rates for eg. So I hope anyone affected by this will complain both to the ombudsman and to John O'Connor. The more voices that join in this the better. Also complain strongly to your local td- that election is looming...
 
I understand the situation you are in but I really cant see how this is unfair. You were subsidised so you didn't have to pay a full mortgage but yet you want to reap the full benefits.

I'm not having a go here, I would just like to hear your reasons for why you think the system should be changed.
 
Of course this is unfair. This person is paying a mortgage to the council of whatever amount. Why shouldn't they, just like anyone else, be able to shop around for a mortgage. They are not suggesting that they sell and profit from the sale - in any event they could not profit as they would have to pay back the clawback to the council.

It is absolutely ludicrous to think that they should have to pay back a clawback to the council just to remortgage when they are remaining in the property. It negates the whole point of affordable housing.
 
Sure, I agree, re-mortgaging should not effect the clawback, but I thought the original post was about buying out the council?
 
I believe the OP wants to buy out the council's share of the property (Shared Ownership) by remortgaging with a bank (which would probably reduce the cost of the mortgage), whilst still maintaining the council's interest (Affordable Housing).
 
It's very unfair. I should have checked when I bought the house to be honest. Of course I was aware of paying back the clawback if i sell the house within 20 years but to have pay back clawback for remortgaging when i probably would never sell seems ludicrous. There is no option of even taking out a home improvement loan. I got a reply about an hour ago from John O'Connor explaining the reasons for the clawback but also explaining that he will be making recommendations to the Department of the Environment, Heritgage and Local Government and local authorities regarding remortgaging affordable homes so maybe something will come from that
 
hi all,
In relation to above, I am just trying to find out if anyone out there who purchased an affordable home (not shared ownership) in last few years, has sold it and what was the process like? Was it straighforward? Was there much profit after paying back original mortgage loan to council AND clawback. I'm not looking to 'make a quick buck' but I bought one approx 18 mths ago and would like to move up the ladder at some stage in the future and need to know how easy/difficult it was. I understand pprofit depends on original sum paid etc but it's just experiences i'm after..

thanks
 
Am so delighted that people are making valid complaints to Ombudsman and Affordable Homes Partnership. Its so unfair that an affordable homes purchaser cannot shop around for the best mortgage.
Also if you put in carpets, paint,wooden floors, and paid for the maintenance charges for your apartment then why should the council benefit from your hard work and money that you have put into your property.
Best of Luck hope it all goes well for you Rita.
 
Thanks for your advice, i will be complaining myself and no i was not looking to sell the property. I just want out of the shared ownership as the equity on the share ownership goes up yearly by inflation and if i was told about the clawback on remortgaging to buy out the shared ownership i would have done my best to get a normally bank mortgage were your are not subject to a clawback on remortgaging only selling the property which i agree with.
 
confused AH said:
Thanks for your advice, i will be complaining myself and no i was not looking to sell the property. I just want out of the shared ownership as the equity on the share ownership goes up yearly by inflation and if i was told about the clawback on remortgaging to buy out the shared ownership i would have done my best to get a normally bank mortgage were your are not subject to a clawback on remortgaging only selling the property which i agree with.
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If you just want to stop paying the rent, why don't you just buy out the rental share and leave your mortgage with the council? I know that remortgaging with a financial institution results in the clawback, but surely this doesn't apply when increasing your share under the shared ownership scheme. That would completely defeat the point of using it to purchase an affordable home in the first place.
 
Ok, I just got confirmation from the Council. Under current legislation, if you purchase your affordable home under shared ownership, you cannot increase your share without incurring the clawback.

So you have this ridiculous situation where you have to do the following to end up owning the home without paying a clawback:

1. Decide shared ownership allocation (lets say 50:50)
2. Pay the council rent on their 50% for 20 years
3. Buy the council's share out over the remaining 10 years (you have 30 years to take full ownership under shared ownership rules). This share will be inflation adjusted.

It seems that this was an oversight and was only noticed when someone tried to increase their share. I really feel sorry for the people stuck in this situation. I'll have to think long and hard about whther I'll want to complete my purchase under this situation.

I was told that the council have contacted the relevant government department and are hoping that legislation will be introduced to correct this. How long this may take seems to be anyone's guess.
 
shanegl said:
I was told that the council have contacted the relevant government department and are hoping that legislation will be introduced to correct this. How long this may take seems to be anyone's guess.
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Well there is an election around the corner you know, why don't you push this onto someone in your electoral area?
 
Hi, I bought (not shared ownership) an affordable house approx. 4yrs ago and remortgaged 2yrs ago. At the time of remortgaging with a financial institution it took approx. 9 months of meetings between the council and ourselves before they finally agreed that we could remortgage. There was nothing in our contract to say we couldnt however we did have to get our house valued and pay them the clawback. I think it was 25% off the value of the house plus the remaining amount on the loan. We are now selling our house and our solicitor has stated that we may still need permission from the council to sell our house even though we have had nothing to do with them for 2 yrs. Personally I dont see why we should have to get their permission as the deeds of our house are no longer with them and they have already got paid for the house!
 
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