Selling apartment but AH sellers devaluing MV

It's on;y once the current value overtakes the market value at the time of the purchase that there is any profit to be considered. If the current value is less than the 2007 MV, then the council gets the lot.
 
RAY1234 said:
Hi folks,
i am in the exact same situation, 12 years into AH and looking to sell and getting told that by the council that they are entitled to 100% of the profit.
the calculation using a 2007 MV comes up with a figure leaving me in negative equity, my 20% back for reaching the 12years is calculated from this figure and still leaves me in negative equity, the council are then saying i can't be in negative equity so they will write off the difference and i get back what i paid originally.

My argument is no calculation should put me in negative equity, the max clawback is the total profit, so i should be entitled to20% of the total profit.

Is it written anywhere that the max clawback that cab be sought is the actual profit on the property?
Im now at the stage politicians are being contacted, if i have no luck an appeal to the Ombudsman is the next option.
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You are not understanding the calculation that formed part of the contract when you got the house.

You simply cannot say that there is a "profit" because the property is worth more than the subsidized price you paid.

Only the amount over the market value of the property at the time of purchase is considered "profit".

Because too many people thought prices would continue to increase, no attention was paid to the calculation if prices dropped.

So whether you agree or not, the council are correct and any professional advisor would be able to see that quite easily and in a way, you should have been told this at the time of purchase.
 
RAY1234 said:
Hi folks,
i am in the exact same situation, 12 years into AH and looking to sell and getting told that by the council that they are entitled to 100% of the profit.
the calculation using a 2007 MV comes up with a figure leaving me in negative equity, my 20% back for reaching the 12years is calculated from this figure and still leaves me in negative equity, the council are then saying i can't be in negative equity so they will write off the difference and i get back what i paid originally.

My argument is no calculation should put me in negative equity, the max clawback is the total profit, so i should be entitled to20% of the total profit.

Is it written anywhere that the max clawback that cab be sought is the actual profit on the property?
Im now at the stage politicians are being contacted, if i have no luck an appeal to the Ombudsman is the next option.
Click to expand...

Hard to comment without seeing the actual figures. Clawback does reduce by 10% a year after year 10. It also refers to figure over AH value and under MV. Seems like council are changing the rules. There are examples on boards.ie of people who had clawback reduces while under MV.

I’ll be taking it higher too if council insist clawback only refers to over the MV. I still think our original understanding is correct.

Can you post actual figures?
 
Take a look at this example from Clare County Council website.

Original Market Value: 280k
Affordable housing price: 196k
Discount 30%

Look at the example where it is sold after 15 years for 430k. Clawback reduces from 30% to 15%. The figure that is given for clawback is €64,500 which is 15% of €430,000. So in this example all clawback above the affordable housing price paid is reduced to 15%. There is no distinction made between clawback under or over the market value.

Does this example make sense?

If the discount only kicked in over the market value, them the calculation should be €280,000 - €196,000 = €84000 plus 15% of (€430,000-€280,000) €22,500. So the clawback would be €106,500. It’s not though, the clawback in the example has reduced to €64,500.

Clear as mud?

Here is the link to where this example is.
 
Seagull said:
If the current value is less than the 2007 MV, then the council gets the lot.
Click to expand...

According to Clare County Council website link that I posted in above reply, this is incorrect in a case where the AH owner has owned for more than 10 years and a clawback reduction applies.
 
Easter said:
Hard to comment without seeing the actual figures. Clawback does reduce by 10% a year after year 10. It also refers to figure over AH value and under MV. Seems like council are changing the rules. There are examples on boards.ie of people who had clawback reduces while under MV.

I’ll be taking it higher too if council insist clawback only refers to over the MV. I still think our original understanding is correct.

Can you post actual figures?
Click to expand...

Hi Easter,
Here’s all my figures..
2007 purchase price €166,000,
2007 MV €370,000
55% reduction

2017 sale price €237,000
Council say they are entitled to 55% of sale price which is €130,500
They then calculated my 20% reduction from this figure, leaving a final clawback figure owed of €104,400
As I paid €166,000 in 2007 they are only looking for €71,000( 237,000 - 166,000)

My understanding was the max they can look for in this case was €71,000 and then my reduction for being there for over 10years would be discounted from there.
 
RAY1234 said:
2017 sale price €237,000
Council say they are entitled to 55% of sale price which is €130,500
They then calculated my 20% reduction from this figure, leaving a final clawback figure owed of €104,400
As I paid €166,000 in 2007 they are only looking for €71,000( 237,000 - 166,000)

My understanding was the max they can look for in this case was €71,000 and then my reduction for being there for over 10years would be discounted from there.
Click to expand...

I think it is open to interpretation. If going by Clare County Council example that I posted, the calculation you’ve been given seems to be correct because it says that the percentage you payback reduces by 10% for each year over 10 years.

However, this is not a direct reflection of what it says in the Housing and Development Act. The Act says:


“(b) The amount payable under paragraph (a) shall be reduced by 10 per cent in respect of each complete year after the 10th year during which the person to whom the house or land was sold has been in occupation of the house or land as his or her normal place of residence.”

I think a good solicitor could challege it. The amount payable never actually reduces if it’s based on a percentage reduction. Amount payable is amount payable. So the amount payable should be less in 2020 than it is in 2019.

I don’t have my folder of original
documents to hand, I’ll be looking very carefully at examples provided then.
 
I suppose the big question I am trying to find an answer to is can the original calculation put me in arrears? If so with such a high original MV my 10% per annum will always be worthless to me up until year 20 and this is the piece that I find unfair.
I have asked the government housing dept for any rules/guidelines on the subject without reply, I have my solicitor working on it and TD’s have been contacted so we’ll see what of anything happens next.
 
You’re not been left in arrears though? The initial calculation of clawback will be based on 55% of sale. That’s correct, but the amount payable is reduced where it would result in the sale resulting in less than what you actually paid.

The source for the answer to your question is Section 99 of the Planning and Development Act. Here: http://www.irishstatutebook.ie/eli/2000/act/30/section/99/enacted/en/html#sec99

Because you got such a large % discount it does look like it would be years before you would see an actual reduction.

What your question should be to solicitor now is how should the Act be interpreted calculating the clawback reduction. Should the reduction be to percentage of clawback due, or to the actual amount payable. Direct your solicitor to section 99 part 3b. It seems unclear. I think in your case it is the only possible source of hope - does the clawback reduction apply to the percentage owed or to amount payable. It’s unclear.
 
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Hi Seagull,

I agree with you 100%. I was recently informed by DLRCOCO that we'd only start to make a profit from the sale of our property before year 20 only if our property sells for over the original market price which was €470 000 back in july 2008 & our property now will never sell for that much ... clawback! What clawback ... so we are sitting ducks ...
 
Hi Ray,

Yup, this is how it is for me too. Not a cent to be made on selling the property on year 19 but over €200 000 to be made if sold on year 20! Crazy ay!
 
The council are allowing me to rent out my AH property, subject to conditions of course, & I now wonder if I'm then allowed to use my AH property as an investment property & can I go on to get a new home mortgage so I can buy a house? Apartment is too small for my growing family! Theres no point in selling apartment until year 20!
 
RAY1234 said:
I suppose the big question I am trying to find an answer to is can the original calculation put me in arrears? If so with such a high original MV my 10% per annum will always be worthless to me up until year 20 and this is the piece that I find unfair.
I have asked the government housing dept for any rules/guidelines on the subject without reply, I have my solicitor working on it and TD’s have been contacted so we’ll see what of anything happens next.
Click to expand...
Hi Ray, just wondering are you still active on this Forum?
 
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