Affordable Housing - Free money in Cork

Jonnie_Onion

A couple found a loophole to sell their house at market value only a few months after they bought it from the council:

http://breakingnews.iol.ie/news/story.asp?j=187582788&p=y87583494


100% profit isn't bad for a few months work. Pity they've ruined it for everyone else though.

godtabh

Makes you sick when you see things like this

BC

I'm sick of seeing this described as a 'loophole'. Its not a loophole, there are no rules at all to say you can't sell the property. The couple just took advantage of the governments stupidity. There should be a clause to say you have to hold on to the property for a certain length of time.

monument

It is a loophole.

As selling a property on like this is not the intended purpose of the affordable housing scheme, it is an omission not to have a clause stopping this, thus it is a loophole.

A loophole is exactly what you describe, something that is not there but should be.

kermitdfrog

How is this a "loophole"? It's not a mistake, it's MEANT to be that way, that you can sell at any time. It's not social housing , it's AFFORDABLE housing. The idea is get people on the property ladder, not restrict them in what they can or cant do once they are there. It's not like they made 100% of the selling value, they would have had to split the costs under the clawback same as anyone else. They bought a house and sold it on again at profit, same as anyone who bought themselves could have done - just because its an affordable house doesnt mean that their right to do so should be restricted.

As selling a property on like this is not the intended purpose of the affordable housing scheme

Why not? The idea is to let those who otherwise couldnt afford to buy property to do so. What you decide to with it is as up to you as a normal home, as long as you dont rent it out for income without living there.

SkepticOne

Most people who can afford 'affordable houses' can also afford to rent. For those who can't afford to rent there should be basic council housing or rent subsidies.

Personally, I think the government should be encouraging people not to get involved with the housing bubble. This is of course politically unrealistic.

lostexpectation

are people on looking for afforadable housing really on a list

I thnk theres purposeful confusiong over social and affordable housing, especially when the afforadable housing isn't affordable which selling the house at 100% shows...

Jonnie_Onion

I took it that they sold the house without having to suffer the usual clawbacks. The value of the house would have had to double over a couple of months otherwise.

monument

kermitdfrog wrote:

The idea is get people on the property ladder, not restrict them in what they can or cant do once they are there.

The idea is to make buying a home "AFFORDABLE", not to get people on "the property ladder" but to get people a home.

kermitdfrog wrote:

They bought a house and sold it on again at profit, same as anyone who bought themselves could have done - just because its an affordable house doesnt mean that their right to do so should be restricted.

How exactly is buying affordable housing the "same as anyone" who has bought a house?

kermitdfrog wrote:

as long as you dont rent it out for income without living there.

Please tell me why one can't rent it out when selling it is just fine?

The idea of buying a house just to sell it for a profit and get on to "the property ladder" is in realty a business one. It is making the property a commodity rather then a place to live.

Noelie

I agree it's not a loophole, it's clearly stated on the website that if you sell within a certain amouth of time there is a clawback fee to be paid. the clawback fee is proportional to the discount at which the property was bought for.
but i also think this shouldn't be allowed, if they want to sell it should have to be sold back to the council.

Nevyn

You all need to go and learn what affordible housings scheme is.

http://oasis.gov.ie/housing/buying_a_house_or_flat/affordable_housing_scheme.html

Rules

You qualify for the Affordable Housing Scheme if :

* you are in need of housing and your income satisfies the income test below, or
* you are registered on a housing waiting list with a local authority, or
* you are a local authority tenant or a tenant purchaser and you want to buy a private house and return your present house to the local authority, or
* you are a tenant for more than one year of a home provided by a housing association under the Capital Loan and Subsidy Scheme and you want to buy a private house and return your present house to the housing association.

The income test only applies to people mentioned in the first bullet point; if you are covered by the second, third or fourth bullet points, you are exempt from the income test.
The income test

* Single income household

If your gross income (before tax) in the last income tax year was 40,000 euro or less (effective January 2006), (previously the limit was 36,500 euro), you are eligible.

* Two income households

Multiply the gross income (before tax) of the higher earner in the last income tax year by 2.5 and add the gross income of the other earner in the last income tax year. If the answer is 100,000 or less (effective January 2006), (previously the limit was 92,000 euro), you are eligible.
Mortgage subsidy scheme

If your gross household income is less than 28,000 (effective January 2006), (previously the cut off was 25,500 euro), you will be entitled to a subsidy that will reduce your mortgage payments. This subsidy will be paid to the local authority. The subsidy is between 1,050 and 2,550 euro per year.

A household that does not qualify under the third and fourth categories above (i.e., a household that does not qualify for this subsidy) may instead qualify for the Mortgage Allowance Scheme.
Selling your house

If you sell your house within 20 years, you will have to pay the local authority a percentage of the proceeds of the sale. This percentage is expressed as the percentage difference between the sale price and the market value of the house. This amount will be reduced by 10% each year after you have owned your home for 10 years. So, if you sell your home after 20 years, you will not have to pay anything to the local authority.

It is people who can't get a mortguage that it is aimed at.

Sleepy

Why have we even got such a scheme to be honest?

I earn significantly over minimum wage, quite a bit over the average industrial wage and I can't afford to buy a house so I rent. There's nothing wrong with renting. Why waste tax-payers money in such a fashion? Surely the disadvantaged in society would be better served with the provision of better health care or education than by handing them valuable property?

gurramok

Sleepy wrote:

Why have we even got such a scheme to be honest?

I earn significantly over minimum wage, quite a bit over the average industrial wage and I can't afford to buy a house so I rent. There's nothing wrong with renting. Why waste tax-payers money in such a fashion? Surely the disadvantaged in society would be better served with the provision of better health care or education than by handing them valuable property?

Most affordable mortgages are cheaper than the rental version hence better option for those on a tight budget.

अधिनायक

There are many thousands of people on low to middle incomes who can't afford a mortgage. It would be impossibly expensive to give them all cheap houses, so the scheme operates as a lottery. Lottery welfare systems are unfair and ineffective.

The scheme is to be paid for by forcing builders to hand over one in 5 houses they build or a cash equivalent. The idea that you can lower prices by taxing suppliers comes from the same asylum that brought you printing more money to pay off debts.

The whole scheme is a PR sham. Eventually the market wil correct itself and all housing will become siginificantly more 'affordable'.

FillSpectre

अधिनाय&#2325 wrote:

The whole scheme is a PR sham. Eventually the market wil correct itself and all housing will become siginificantly more 'affordable'.

Or our culture will change and less people will own like the norm in the rest of Europe. There is no outcome set in stone and there are many possible outcomes.

अधिनायक

FillSpectre wrote:

There is no outcome set in stone and there are many possible outcomes.

OK this is true. The point is that houses will not become more affordable by operating a lottery funded by taxes on housing producton.

Sleepy

Rather than hijack this thread, I've created a thread on this in humanities, to discuss the issue in the larger context:

http://www.boards.ie/vbulletin/showthread.php?p=51656943

FillSpectre

अधिनाय&#2325 wrote:

OK this is true. The point is that houses will not become more affordable by operating a lottery funded by taxes on housing producton.

Providing free and cheap accomadation didn't do it either. You need to make people feel they worked for something so they feel they have something to lose.

On the point. It is obvioulsy not in the spirit of the scheme to sell the house shortly afterwards. I still not sure what "loophole" they used and how they made a profit as affordable housing doesn't seem that much cheaper below market value

अधिनायक

It is not clear that any loophole was found. If you buy a house worth 250K and pay just 200K then you are deemed to have obtained a house at a 20% discount. If you sell within the first 10 years then you have to pay 20% of the proceeds back to the council. eg if you sell for 300K you have to repay 60K. Between years 11-20, the clawback is reduced by 10% each year. After 20 years you can sell with no penalty.

Lower but not necessarily more affordable house prices could result from

1. increased supply of building land
2. increased density rules
3. higher oil prices
4. better performance in other non-property investment sectors
5. loss of investor confidence
6. recession (lower incomes)
7. increased interest rates

Government policy is to stabilise property prices rather than to increase or reduce them. The government only has real control over factors 1 and 2 above.