Do you still owe clawback when you sell before 10Yrs

M

maza

Guest
Hi
am hoping to apply for a AH and dont really understand the clawback. I get it that you owe money if you sell and make a profit but what happens when you sell before the 10 years and sell it for what you bought it for will you owe any mony to the council.
Thanks for your replies
 
You might. What matters is not the actual price you sell it for but the price that the Council thinks that you should be able to sell it for. Their valuation will probably be higher.
 
Where are you thinking of buying ? Not too many affordable housing units have clawbacks, many are for sale at open market value.
As far as im aware, the bank who advanced you the mortgage has the first charge on the sale of your property so assuming you sold the house for what you paid for it the local authority would not be looking for anything off you.
 
kazana said:
What matters is not the actual price you sell it for but the price that the Council thinks that you should be able to sell it for. Their valuation will probably be higher.
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The Council has nothing to do with the sale of the property or the price the person who has been allocated the house sells it for.
 
Hi am thinking of fingal but dont plan to be there for the 10 yrs and am slightly confused about what happens when you sell if for what you bought it for or less. fingal only do examples of when a profit has been made. also i phoned them and the person was of no help just said it was all[ in the information booklet
 
I think if you sell it for less than you bought it for you'l be in negitive equity along with half the country !!! If you are in negitive equity with the bank you def dont owe anything back to the Council.
 

I don't know about Fingal, but in my experience (tallaght):
I pay 200,000, and the council have a theoretical discount of 100,000, giving a price of 300,000:

If the price drops below 300,000, then the council takes the first negative equity hit, of up to 100,000, so I can sell for 280,000 and clear my debts, walking away free, leaving the council with the 20,000 loss.

If the price drops below 200,000 when I sell, then I have the negative equity for anything below 200,000. So if I sell for 180,000, I owe 20,000, and the council have a 100,000 loss.

The council, when I agree a sale, sends a valuer in. The valuer estimates the worth of the place, and compares against the price I'm selling for. They can object to the sale price if it is ludicrous (let's say a reasonable market valuation is 250,000, and I want to sell it to my brother for 20,000).

From talking to them though, they know that market value for any AH has dropped to the floor, and won't kick up unless you are selling for an insanely low price.
 
Hi Thanks for the info i think i will ring fingal again and give an example like yours so maybe they can give me a straight answer. i know if it sell for less will be in negative equity but was just wondering if you make no profit surely you dont owe anyhing? maybe i am wrong
 

Whatever loan you got from the bank, you will have to pay back. It really depends on whether you can sell it for what you yourself paid. If you can pay that off, you should be ok. If not, you'll have to pay.
 
You wont be allowed be make a profit within the 10 years anyway, so I reckon selling back to the council in a few years would be the easiest option.
 
Renter27 said:
You wont be allowed be make a profit within the 10 years anyway, .
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This isn't true. If market values rise in the next few years you can make a profit on your share, you just owe the council a percentage of the profit.

It won't apply to the vast majority who have purchased AH, but anyone buying at greatly reduced prices now might be in this position down the road.
 
hi cheeus
I tried to private message you but your inbox is full. so its bouncing back to me.
 

Excellent

Thanks.
 
your wrong cheeus, you cannot make a profit from an affordable unit before the ten years are up..... if you purchased a unit say for 200,000 and sold it for 300k , for the first ten years you cannot make a profit whereby the council would be entitled to the full 300k,after the ten years you make a tenth of the profit for every year after that, so after ten years you would make the full profit. This clause was inserted to prevent people taking advantage of a cheap house in Dublin.......
 

This is incorrect and shows a complete misunderstanding of how the clawback works. It's summed up fairly clearly [broken link removed]. In Scenario 1 on that page, John and Mary are still making a profit of €35,000.
 
Brook if i decided to sell, would i need the city council to re-evalute price of property ,as when originally priced it was based on celtic tiger prices.So percentage claw back could never be met , also would i be entitled to any monies back i paid in mortgage re-payments
 
Scenario 4 - 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 €260,000 then the clawback would be based on the lower market value of €260,000 less what they paid €196,000, which is €64,000. So they have to pay back €64,000 to the local authority when they sell in addition to any money owing on their mortgage.
Scenario 5

  • If the market value of the home decreases to a level in line with the affordable price and a discount is no longer available then a clawback would not apply. Your local authority will advise you about this.
 

This is definitely not the case and anyone who is confused should ring their local council for clarification. The council's hold on the property reduces by 10% a year after year 10. This has nothing to do with the profit you make on what you paid if prices rise. You make a profit on your share, the council make a profit on their share of market value before 10 years are up.

Ring for clarification if you're unsure Nesta, you've inadvertently given the wrong advice here.
 
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