Stuck in clawback

Victor

We don't know your exact situation, but I'm sure there are options for expanding families.

I think have a chat with www.mabs.ie and go from there.

warrenaldo

Hey BigMomma - Im on the affordable Housing list for SDCC for the past year. I have been wondering about the clawback. You mentioned in an earlier post that you can buy your way out? What do you mean?

If you say have a 20 year mortgage with them. But pay it off in 15 years. Does the clawback not apply anymore?

bigmoma

Hi Warrenaldo,

To answer your question - regardless of whether you clear your mortgage early the clawback stands for the 20 years. For example my neighbour has a nine year mortgage and the clawback will apply to her for another eleven years after her morgage is paid.

antoinolachtnai

How much did you pay for the house originally, how much discount did you get on it? So if you sold your house today, how much would you have to pay for the clawback?

The_Conductor

Look- you bought the house from the council at what was considered below fair normal market value. The idea of the clawback is to stop people who have received this assistance from benefiting unfairly by placing their house on the open market and receiving the open market price for the house- as the intention of the scheme is to house people who are not able to afford to house themselves, not to change their financial circumstances by allowing them to make a quick buck by selling off their subsidised house. As time progresses- the council gradually releases their interest in the property until at a point in the future you are able to stand on your own feet- in this case 20 years.

This is an implicit understanding backed up by a legally binding contract. The council is not obliged to sell you the house at below market value - it does so to house you- not to make you better off financially. If you wanted the financial freedom that you now profess to desire- you should have carefully weighed up what your obligations under the scheme were/are and decided when in possession of all the facts whether this was for you or not. You signed a contract, you are contractually bound to abide by the contract. In exchange you purchased a house for below its fair market value.

If you want to move away from the contract you signed- do it in the manner prescribed in the contract- i.e. accept that there is a clawback and plan accordingly.

I'm sorry, it really sounds like its a case of you wanting to have your cake and eat it. If you were not willing to accept that you were tying yourself up for a set period of time and had obligations towards the council which was assisting you in purchasing the property- you should not have signed the contract. You signed it.

Its difficult for a lot of people to accept that you could simply walk away from your contract- when you were given an opportunity that a lot of us never had......

Do-more

antoinolachtnai wrote:

How much did you pay for the house originally?

tbh wrote:

such mortgages will generally offer up to 97% of the purchase price......local authority loans which are capped at 185,000 euro (effective January 2006).

You say that your monthly repayments are €900 so if you have borrowed the full €185,000 your interest rate is only 1.6%, more likely you have borrowed less, in which case you have bought your home for a real knock down price.

Correct me if I'm wrong, but if one or both of you are made unemployed, you will also receive a mortgage subsidy from DCC so you effectively also have income protection built into your repayments.

On the face of it you are in a better position longterm than most on higher incomes who have to purchase at market prices.

Consult MABS and sort out your credit issues and look at the glass being half full!

jdivision

Do-more wrote:

You say that your monthly repayments are €900 so if you have borrowed the full €185,000 your interest rate is only 1.6%

That can't be right, my mortgage is for e142,500 and I'm paying e800 a month at an interest rate of more than 4 per cent

dame

I may be wrong but I think what probably happened is that since the OP and hubby lived in a council house for a number of years before getting their own on the affordable housing scheme, they just weren't used to paying a mortgage and haven't learnt how (or are unwilling) to scale back on their lifestyle spending.

Sleipnir

OP, Does that mean you'll have your mortgage paid off in 20 years time?

chump

jdivision wrote:

That can't be right, my mortgage is for e142,500 and I'm paying e800 a month at an interest rate of more than 4 per cent

what's the mortgage term for bejaysus sake...

Rebeller

tbh wrote:

exactly. From the OP, it sounds like they want to get credit on their house (topping up mortgage, consolidating loans etc) - but it's not (strictly speaking) their house, and that's not what the scheme is for.

This comment reflects the misinformed view that most people have of affordable housing. It seems that many of the posters here are confusing social housing with affordable housing. It also perhaps hints at a certain level of snobbery towards those who are unable to pay exploitative open market prices.

The OP owns his or her house in exactly the same manner that any commercial bank mortgage holder does. DCC do not own her house.

He or she incurs the same risk of losing her home if mortgage payments are not made. He or she has exactly the same repayment responsibilities as any other mortgage holder.

Affordable houses are sold to eligible candidates at cost price. While this ultimately involves a subsidy expressed in the discount compared with the full open market price, it does not equate to a "hand-out".

The successive failure of Fianna Fail (they have been in government for 39 of the last 50 years after all including 17 of the past 20!) to regulate the housing market to ensure that housing property does not became the speculative commodity it has resulted in large numbers of gainfully employed, double income households being unable to purchase their own homes.

In a State with such weak and almost non-existent tenant protection legislation home ownership is the goal of most families and individuals.

The views expressed by many posters in this thread reflect the typical Irish attitude that if you acquire something at less than the usual price you should not expect to receive the same quality of service or be subject to the same conditions as others who have purchased at full market value.

The purpose of the affordable housing scheme is to enable those who would not otherwise be able to own their own homes to do so. It is not intended to provide a source of speculative capital which buyers can use to get a foothold on the open market property ladder, hence the charge on the title (clawback provision) of all such affordable homes.

While I have no objection to the existence of this clawback provision I do oppose the idea of tying homeowners to a single mortgage provider for life. Affordable house mortgage payers should have the same freedom as everyone else to shop around and change providers.

OP, I am very surprised by your claim that you were not made aware at the time of purchase of the restrictions inherent in all affordable house acquisitions. One of the standard conditions outlined in all schemes provided by the various local authorities around the country is that you need to provide written confirmation from your solicitor upon acceptance of the offer confirming that he or she has explained the terms of the purchase contract to you. Perhaps you were so caught up in the joy of the moment that you overlooked this?

The reason you are unable to re-mortgage or otherwise use your home as collateral for any other loan is the charge placed on the title (the clawback provision). No commercial lending institution will accept a house with such a charge as collateral for the reason that in the event of them having to call in the debt for default and sell the house they would be unable to freely dispose of the house in order to generate maximum value to recover the debt due. It' like owning a field through which your neighbour has a legal right of way. Certain prospective buyers of such a field would think twice knowing that their future use of the field for any development would be restricted by the obligation to allow your neighbour access to the property.

As others have said I would lobby your TD about the "tied to one lender" restriction. However, it will not be possible to get out of the clawback provision.

Good luck.

tbh

good post rebeller. one point:

The views expressed by many posters in this thread reflect the typical Irish attitude that if you acquire something at less than the usual price you should not expect to receive the same quality of service or be subject to the same conditions as others who have purchased at full market value.

no, I'd argue that the views expressed by the majority is that you should not expect to be able to borrow money secured against an asset which you cannot afford yourself - you've made that point yourself.

dame

Rebeller wrote:

This comment reflects the misinformed view that most people have of affordable housing. It seems that many of the posters here are confusing social housing with affordable housing. It also perhaps hints at a certain level of snobbery towards those who are unable to pay exploitative open market prices.

The OP owns his or her house in exactly the same manner that any commercial bank mortgage holder does. DCC do not own her house.

He or she incurs the same risk of losing her home if mortgage payments are not made. He or she has exactly the same repayment responsibilities as any other mortgage holder.

Affordable houses are sold to eligible candidates at cost price. While this ultimately involves a subsidy expressed in the discount compared with the full open market price, it does not equate to a "hand-out".

The successive failure of Fianna Fail (they have been in government for 39 of the last 50 years after all including 17 of the past 20!) to regulate the housing market to ensure that housing property does not became the speculative commodity it has resulted in large numbers of gainfully employed, double income households being unable to purchase their own homes.

In a State with such weak and almost non-existent tenant protection legislation home ownership is the goal of most families and individuals.

The views expressed by many posters in this thread reflect the typical Irish attitude that if you acquire something at less than the usual price you should not expect to receive the same quality of service or be subject to the same conditions as others who have purchased at full market value.

The purpose of the affordable housing scheme is to enable those who would not otherwise be able to own their own homes to do so. It is not intended to provide a source of speculative capital which buyers can use to get a foothold on the open market property ladder, hence the charge on the title (clawback provision) of all such affordable homes.

While I have no objection to the existence of this clawback provision I do oppose the idea of tying homeowners to a single mortgage provider for life. Affordable house mortgage payers should have the same freedom as everyone else to shop around and change providers.

OP, I am very surprised by your claim that you were not made aware at the time of purchase of the restrictions inherent in all affordable house acquisitions. One of the standard conditions outlined in all schemes provided by the various local authorities around the country is that you need to provide written confirmation from your solicitor upon acceptance of the offer confirming that he or she has explained the terms of the purchase contract to you. Perhaps you were so caught up in the joy of the moment that you overlooked this?

The reason you are unable to re-mortgage or otherwise use your home as collateral for any other loan is the charge placed on the title (the clawback provision). No commercial lending institution will accept a house with such a charge as collateral for the reason that in the event of them having to call in the debt for default and sell the house they would be unable to freely dispose of the house in order to generate maximum value to recover the debt due. It' like owning a field through which your neighbour has a legal right of way. Certain prospective buyers of such a field would think twice knowing that their future use of the field for any development would be restricted by the obligation to allow your neighbour access to the property.

As others have said I would lobby your TD about the "tied to one lender" restriction. However, it will not be possible to get out of the clawback provision.

Good luck.

So a "subsidy" does not equal a hand-out. Why do farmers get stick about getting subsidies from the EU then? If it's a subsidy, not a hand-out, then why don't we all get a subsidy so we can buy our house for less? After all, all farmers get the same subsidy per head of cattle etc.

It's a way for the councils to get at least some of their tenants out of council houses and into paying their own mortgages. It means the council have less people to house and if the people are at least paying cost price for their house, then they're not costing the council forever.

By the way, a subsidy has to come from somewhere.....stamp duty from the rest of us?

Victor

dame wrote:

So a "subsidy" does not equal a hand-out. Why do farmers get stick about getting subsidies from the EU then? If it's a subsidy, not a hand-out, then why don't we all get a subsidy so we can buy our house for less? After all, all farmers get the same subsidy per head of cattle etc.

.....

By the way, a subsidy has to come from somewhere.....stamp duty from the rest of us?

Other people get a subsidy in the form of mortgage interest relief, which low earners may not be fully able to avail of.

Also, the councils don't want to move people from council housing, they want to sell the housing so as to create a mix of owned and rented properties. Otherwise you just end up with ghettos.

gurramok

*SNOB* alert!
Guess some people like Donal Lynch prefer ghetto's rather than integration which is vitrolic and outrageous.

---

From http://www.unison.ie/irish_independent/stories.php3?ca=45&si=1760015&issue_id=15151

Put me down for a Killiney pad and affordable yacht

IT'S just so unfair. They're now building 'affordable' housing in that haven of the rich and famous, Killiney.

By 'affordable' they mean, of course, that only first-time buyers who are earning a pittance can be placed on the list. So an impoverished young couple who never even thought to want to live in Killiney gets a place for about 200 grand less than the market price, whereas someone like me, who has always dreamed of overlooking the sea from my own bay win-dow, is not in with a chance.Which just goes to show - again - that it's no goodbeing middle class in this country. If neither rich nor poor but slightly intelligent, with a reasonable job and an average income, you have to fight for everything.

Whereas if you're a bit thick, from the inner city with a job that pays buttons, they lower the bar so you can get into university with fewer points and then allow you to have a house around the corner from Bono.

And you can't really allow an area like Killiney to be pulled down by blow-ins so the Government would probably have to supplement their affordable housing with affordable K Club membership and affordable yachts.

It sends out the wrong message to social climbing wannabes, like me. It says, "If you really want to move up in the world, don't bother trying - because sooner or later some politician will take pity and you'll get a free leg up."

Donal Lynch

---

godtabh

gurramok wrote:

*SNOB* alert!
Guess some people like Donal Lynch prefer ghetto's rather than integration which is vitrolic and outrageous.

---

From http://www.unison.ie/irish_independent/stories.php3?ca=45&si=1760015&issue_id=15151

Put me down for a Killiney pad and affordable yacht

IT'S just so unfair. They're now building 'affordable' housing in that haven of the rich and famous, Killiney.

By 'affordable' they mean, of course, that only first-time buyers who are earning a pittance can be placed on the list. So an impoverished young couple who never even thought to want to live in Killiney gets a place for about 200 grand less than the market price, whereas someone like me, who has always dreamed of overlooking the sea from my own bay win-dow, is not in with a chance.Which just goes to show - again - that it's no goodbeing middle class in this country. If neither rich nor poor but slightly intelligent, with a reasonable job and an average income, you have to fight for everything.

Whereas if you're a bit thick, from the inner city with a job that pays buttons, they lower the bar so you can get into university with fewer points and then allow you to have a house around the corner from Bono.

And you can't really allow an area like Killiney to be pulled down by blow-ins so the Government would probably have to supplement their affordable housing with affordable K Club membership and affordable yachts.

It sends out the wrong message to social climbing wannabes, like me. It says, "If you really want to move up in the world, don't bother trying - because sooner or later some politician will take pity and you'll get a free leg up."

Donal Lynch

---

I thought you were Donal Lynch for a minute until I finally got logged in to the Independent site.

Your title says it all

dalk

Donal Lynch wrote:

By 'affordable' they mean, of course, that only first-time buyers who are earning a pittance can be placed on the list.

Must be nice to look on earnings of up to €55k a year for a single person, or up to €75k for a couple (the income limit to apply for Affordable Housing) as being a 'pittance'...

jdivision

chump wrote:

what's the mortgage term for bejaysus sake...

20 years I think

BC

dalk wrote:

Must be nice to look on earnings of up to €55k a year for a single person, or up to €75k for a couple (the income limit to apply for Affordable Housing) as being a 'pittance'...

Its up to 65K in DCC for a single person. Hardly a pittance.

The_Conductor

dalk wrote:

Must be nice to look on earnings of up to €55k a year for a single person, or up to €75k for a couple (the income limit to apply for Affordable Housing) as being a 'pittance'...

Two graduate recruits in the civil service on the midpoint of the salary scale (after 8 years as Executive Officers (graduate recruitment level)) would still comfortably qualify for affordable housing, as indeed would 2 Gardai, 2 Teachers or 2 Nurses......

What does that say?

jdivision

smccarrick wrote:

Two graduate recruits in the civil service on the midpoint of the salary scale (after 8 years as Executive Officers (graduate recruitment level)) would still comfortably qualify for affordable housing, as indeed would 2 Gardai, 2 Teachers or 2 Nurses......

What does that say?

Only on their basic salary scale. "Nurses now earn more than €55,000 a year on average when overtime and allowances are taken into account"

http://archives.tcm.ie/businesspost/2006/11/19/story18959.asp

Calina

jdivision wrote:

Only on their basic salary scale. "Nurses now earn more than €55,000 a year on average when overtime and allowances are taken into account"

http://archives.tcm.ie/businesspost/2006/11/19/story18959.asp

but not everyone wants to do overtime, to be blunt.

Moonbeam

There are different income thresholds for the affordable housing scheme and initative..

How do I qualify for the Affordable Housing Scheme ? #5392

How do I qualify for the Affordable Housing Scheme ? You must be a first time buyer (certain limited exceptions apply). You must be in permanent employment for at least one year prior to application. Your income on your P60 from the previous tax year must be within the following limits: Single Income: must not exceed €36,000 in the previous tax year. Two Income Household: two and a half times the principal earner (larger) plus once the subsidy (smaller) earner must not exceed €92,000 in the previous tax year. These upper income limits do not apply if you are a tenant or tenant purchaser of a Local Authority of a tenant of a Voluntary Association or your name is on a Local Authority housing list.


and from fingal coco website -

Income Limits: Single up to €55,000 / Joint €150,000 (multiplier applies).

gazzer

Myself and my partner bought a house from Fingal 5 years ago under the affordable housing scheme.. The house cost us 127,000 euro, the market value was 175,000 so it was a godsend to us as 130,000 was the most we could get for a mortgage at the time.. We knew though that we would have to keep our mortgage with Fingal until such a time as we could qualify for a mortage for the market value of the house and pay the clawback fee.

Luckily we both got promotions after a couple of years and were in a position to qualify for a higher mortgage with a bank and so were able to pay fingal the 50,000 euro clawback fee.

jdivision

Calina wrote:

but not everyone wants to do overtime, to be blunt.

To be blunt, nurses work overtime as a regular part of their rostered hours. It's part of the job.

godtabh

jdivision wrote:

To be blunt, nurses work overtime as a regular part of their rostered hours. It's part of the job.

Over time is taken as a different weighted factor compared to your basic income when applying for a home loan isnt it?

I think your basic income is the more important factor when applying for a home loan as you aren't guaranteed over time but for sociable and affordable housing its based on your earnings for the previous year isnt it?

Moonbeam

kearnsr wrote:

Over time is taken as a different weighted factor compared to your basic income when applying for a home loan isnt it?

I think your basic income is the more important factor when applying for a home loan as you aren't guaranteed over time but for sociable and affordable housing its based on your earnings for the previous year isnt it?

Yes overtime and bonuses have a different weighting to you basic salary as they are not guranteed.

Mortgages are always based primarily on your earnings for the previous year unless there has being a remarkable change that you can prove,you supply your 6 most recent payslips too.

godtabh

Moonbeam wrote:

Yes overtime and bonuses have a different weighting to you basic salary as they are not guranteed.

Mortgages are always based primarily on your earnings for the previous year unless there has being a remarkable change that you can prove,you supply your 6 most recent payslips too.

Thats what I was saying but I was asking the question does it apply to social and affordable housing?

Moonbeam

yup,and they can compeltely knock you off qualifying for it too.

msscarlet

How Clawback works.
If I get an affordable home for €240,000. The market value of property being €345,000. Then I am getting a property for approx 30% less than other people in the same development.

Therefore my mortgage is 30% less than the other people.

Therefore if I sell the property in first 10 years. I must pay back 30% of the resale value to the council. After the 10 years, the amount of clawback decreases by 10% each year until the 20th year. After 20 years there is no payback. U must be resident in your property to avail of clawback.

After the 11th year I pay 27% clawback
After the 12th year I pay 24% clawback
After the 13th year I pay 21% clawback
After the 14th year I pay 18% clawback
After the 15th year I pay 15% clawback
After the 16th year I pay 12% clawback
After the 17th year I pay 9% clawback
After the 18th year I pay 6% clawback
After the 19th year I pay 3% clawback
and after 20 years I pay no clawback.

All the information on affordable housing states this information. Maybe you didn't understand or read the information before you bought.

If I get an affordable home and sell it within 20 years I KNOW that I will have to pay the clawback I think it's only fair.

The affordable housing scheme was designed to give people a chance to buy their own home not to make a profit.

Its like an investment or saving scheme!!!
If I invest €4 at 25% interest I will get €5 (€4 + interest of €1)
If I invest €16 at 25% interest I will get €20(€16 + interest of €4)

It's basic maths. Affordable housing works the same way.

Are you sure that you cannot change mortgage provider. I believe that council does variable rate mortgage! Surely it's anti competitive if people can't chose their own mortgage provider.

Social Housing is not the same as affordable housing. With Social Housing the local authority is your landlord and you pay rent to them. Affordable Housing you are the owner of the property and you pay the mortgage. You must be in secure employment to secure mortgage for affordale housing. You may take mortgage out with local authority, IIB bank, EBS building society or Bank of Ireland.

Average wage in Ireland is around €33,000 yet average person cannot buy a modest 1 bed apt in Dublin for that amount.

All you begrudgers out there can apply for affordale housing unless you earn over €58,000!!!!
I rather have a block load of affordable housing owner occupiers living beside that take care and pride in their homes than a private property landlord letting out apartment on short term leases to anyone willing to pay inflated rents.Turnover of tenants high, some tenants don't care as they haven't invested in the property.
At least the affordable housing residents will contribute to building a community.