Affordable Housing - is it really worth it?

Afuera

jdivision wrote:

Have you read the posts showing that you can't lose more than you paid for the apartment on the affordable housing list so in the worst possible scenario you're paying an interest only mortgage for four or five years.

I hate to be pedantic but this isn't exactly 100% correct. Basically, the council will waive all or part of the clawback to prevent the original buyer being in a situation of negative equity. However, it is possible (though unlikely) that the value of the property could go below the value of the buyers mortgage. The clawback would be waived in this case but the buyer would be still left out of pocket if they had to sell. Just thought I'd clear it up, as there seems to be a lot of confusion around this provision.

ronbyrne2005

bobbysands81 wrote:

There is NOT going to be a downturn in the market to the tune of 15-20% in Dublin.

Eh it is already happening, prices are down 10% in most of Dublin already.

gurramok

Afuera wrote:

I hate to be pedantic but this isn't exactly 100% correct. Basically, the council will waive all or part of the clawback to prevent the original buyer being in a situation of negative equity. However, it is possible (though unlikely) that the value of the property could go below the value of the buyers mortgage. The clawback would be waived in this case but the buyer would be still left out of pocket if they had to sell. Just thought I'd clear it up, as there seems to be a lot of confusion around this provision.

So are you saying, its best to have a big mortgage/small deposit than a smaller mortgage/big deposit to avoid losing money as the size of the mortgage will determine how the council decides if your in negative equity??

Drapper

Prople PLEASE read Section 9 of the Housing Miscelaneous Act 2004 on the ClawBACk

Stilly statments being made here!!

http://www.irishstatutebook.ie/2004/en/act/pub/0043/sec0001.html#sec1

and

http://www.irishstatutebook.ie/2002/en/act/pub/0009/sec0009.html#partii-sec9

podge018

What are you trying to say Drapper?

Madong

he's saying that issues such as negative equity are covered! and the punter is protected in a down market!

the Act was extablished to protect both parties!

Afuera

gurramok wrote:

So are you saying, its best to have a big mortgage/small deposit than a smaller mortgage/big deposit to avoid losing money as the size of the mortgage will determine how the council decides if your in negative equity??

No, that's not what I'm saying. Sorry if I wasn't clear in the post.
I'll use some figures to show you how I think it works:

A buyer purchases a property worth 300k for 150k (i.e. clawback of 50% will be expected if they sell within 10 years). If they sell for 200k then technically they would owe the council 100k and they would receive 100k for themselves. The original purchase was 150k so in this case the council will only demand 50k clawback instead of the full 100k. This means that the buyer will receive 150k for themselves which will cover the original purchase price.

Using different figures, I'll show you how it's still possible for the buyer to lose though:

Same buyer purchases a property valued at 300k for 150k. They end up selling it for 100k due to changed circumstances. They should pay a 50% clawback to the council of 50k but since the selling price is below the original purchase price the whole clawback will be waived. If the 100k that they receive from the sale doesn't cover their outstanding mortgage, they will be in negative territory.

podge018

Well put Afuera, that was my understanding. Unless the market value of the property at point of sale in the future goes below what you actually paid, then you will be covered by the housing acts and wont incur a loss.

I can't see my 312k valued apartment ever decreasing in value to 156k, which is what I paid for it. Hopefully not anyway!

Madong

Afuera wrote:

No, that's not what I'm saying. Sorry if I wasn't clear in the post.
I'll use some figures to show you how I think it works:

A buyer purchases a property worth 300k for 150k (i.e. clawback of 50% will be expected if they sell within 10 years). If they sell for 200k then technically they would owe the council 100k and they would receive 100k for themselves. The original purchase was 150k so in this case the council will only demand 50k clawback instead of the full 100k. This means that the buyer will receive 150k for themselves which will cover the original purchase price.

Using different figures, I'll show you how it's still possible for the buyer to lose though:

Same buyer purchases a property valued at 300k for 150k. They end up selling it for 100k due to changed circumstances. They should pay a 50% clawback to the council of 50k but since the selling price is below the original purchase price the whole clawback will be waived. If the 100k that they receive from the sale doesn't cover their outstanding mortgage, they will be in negative territory.

Again the person cannot be held responsible to the Council for the negative equity ! hence they pay nothing back:-
Housing (Miscellaneous Provisions) Act, 2002

9 (d) Where the amount payable under paragraph (a) would reduce the proceeds of the sale (disregarding solicitor and estate agent's costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result.

Afuera

Madong wrote:

Again the person cannot be held responsible to the Council for the negative equity ! hence they pay nothing back:-
Housing (Miscellaneous Provisions) Act, 2002

9 (d) Where the amount payable under paragraph (a) would reduce the proceeds of the sale (disregarding solicitor and estate agent's costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result.

I think you're reading this wrong Madong. The "paragraph (a)", refered to in the excerpt you supplied is only talking about the clawback. The buyer would still have a mortgage that they have to pay back. While there are provisions within AH to protect the buyer against negative equity, I don't think it can remove all their financial responsibilities on the transaction.

Philbert

warrenaldo wrote:

I have rang/emailed the affordable housing and they stated that "The amont to be payed back is directly linked to the initial discount that you received when you purchased your home. ie: if you got 50% discount then you would have to pay 50% back"

I called them too and got the exact same response :rolleyes: Remember this similar thread?

warrenaldo wrote:

I assume that whoever i have rang and emailed in SDCC just does not know there facts - as negative equity has propbably not been discussed too often in the irish property market of late

Agreed. Is there any way we could get them to make an official statement on this because I still wont be convinced until I hear it from the horses mouth! Regardless of the links posted.

A Random Walk

Might want to make it clear to them you're talking about a house price fall. A lot of people in this country don't seem to realise that prices don't always go up.

Philbert

A Random Walk wrote:

Might want to make it clear to them you're talking about a house price fall.

I did. And Im sure warrenaldo did too.

The person I spoke with was rude and made me feel stupid for asking such a question when the obvious answer was "clawback % regarless of market value".

If the "Housing (Miscellaneous Provisions) Act, 2002" link posted earlier is valid, then it sounds to me like the AH staff are not even aware of it themselves :rolleyes:

warrenaldo

i had the exact same response as philbert when i rang. I asked specifically about the result in house price fall. I then emailed from another account and they quoted me with an extract from their website. And a link to the FAQ.
I am not fully convinced either so it would be great if they would make some official statemtent.

Afuera

Philbert wrote:

If the "Housing (Miscellaneous Provisions) Act, 2002" link posted earlier is valid, then it sounds to me like the AH staff are not even aware of it themselves :rolleyes:

Did you mention the Act in question to them on the phone? If they don't know what you're talking about when you mention it, you should tell them to pass you on to someone more senior.

Philbert

Afuera wrote:

Did you mention the Act in question to them on the phone? If they don't know what you're talking about when you mention it, you should tell them to pass you on to someone more senior.

No I didnt because I called them a couple of months ago, and only found this thread today. I can just imagine calling that woman again and quoting legislation to her (that I can barely understand myself), it would be like trying to convince her that santa claus is real. Does anyone have a solid contact in AH that they could call or email about this and get an official answer?

podge018

Lads it doesn't matter what the council say, or have printed anywhere in their documentation, the Housing Act is written into the law of the country and nothing the coco say or do overrides that.

Afuera

podge018 wrote:

Lads it doesn't matter what the council say, or have printed anywhere in their documentation, the Housing Act is written into the law of the country and nothing the coco say or do overrides that.

You're right podge018, although I can also understand peoples's worries when they are being told contradictory things about the clawback. The council really should be providing accurate information on this.

Drapper

The Council are only interested in the clawback its return/non return on sale, the mortgage is still the punters reponsibilty! if negative equity arises here they really don't care!

patrickolee

podge018 wrote:

Lads it doesn't matter what the council say, or have printed anywhere in their documentation, the Housing Act is written into the law of the country and nothing the coco say or do overrides that.

Unless they change it...

Shanod

I have a quick affordable housing question that i cant find the answer for

I have my own apartment which my gf moved into a few months ago - seen as shes living with me (but does pay 'rent', claims rent relief, etc) and she's originally not from this town (only moved here a few months ago) so she'd probably have to say shes living with her bf who has his own place, is she eligible to apply for the affordable housing? (and would she be at any disadvantage if she was)

Shanod

I have a quick affordable housing question that i cant find the answer for

I have my own apartment which my gf moved into a few months ago - seen as shes living with me (but does pay 'rent', claims rent relief, etc) and she's originally not from this town (only moved here a few months ago) so she'd probably have to say shes living with her bf who has his own place, is she eligible to apply for the affordable housing? (and would she be at any disadvantage if she was)

byte

Since her name wouldn't be associated with the ownership of your apartment and you're both not married, I don't see there being a problem.

Of course, I'm open to correction...

Brooklyn74

Shanod wrote:

I have my own apartment which my gf moved into a few months ago - seen as shes living with me (but does pay 'rent', claims rent relief, etc) and she's originally not from this town (only moved here a few months ago) so she'd probably have to say shes living with her bf who has his own place, is she eligible to apply for the affordable housing? (and would she be at any disadvantage if she was)

I don't know why she'd have to say who she was renting from. When I applied, it was enough to indicate that I was in private rented accommodation. No further details about that were requested.

Different local authorities may have different policies as far as length of residence in the area so you should let us know who she'd be applying to.

sheepshagger

I was lucky enough to get offered an Affordable Home (apartment) after only being on the waiting list for about 2 just months.

I think some people want both the cake and to eat it. . a cheap house now, AND to pocket the profit they make when they sell it when they want to 'upgrade'.

Without the scheme theres NO WAY i'd be able to buy my own place. . Id still be stuck renting - for that I am very greatful.

texas star

congrats sheepshagger, you must be over the moon. Good luck with it:)

Drapper

sheepshagger wrote:

I was lucky enough to get offered an Affordable Home (apartment) after only being on the waiting list for about 2 just months.

I think some people want both the cake and to eat it. . a cheap house now, AND to pocket the profit they make when they sell it when they want to 'upgrade'.

Without the scheme theres NO WAY i'd be able to buy my own place. . Id still be stuck renting - for that I am very greatful.

well put, good luck with your new place, where did you get one?

sheepshagger

texas star wrote:

congrats sheepshagger, you must be over the moon. Good luck with it:)

Thanks. .. yep am very happy with it (theres been a few teething problems but I'm sure I'd get that if I bought the place at full price). The Apartments in a development in Tallaght - very close to the Square and the LUAS (so very handy for getting into work). . .only 20-25 Euro for a taxi home if having beers after a game etc

The whole thing happened so fast (from applying to getting the keys) .. my advice would be if you get offered something and it works OK location wise in relation to getting to work then go for it. . .its feels better paying money to the Bank rather than a landlord each month.

texas star

I also got pulled out of the draw for an Affordable house. I got a 3 bedhouse in Finglas. It wont be ready till July/Aug. I cant believe my luck as I also work in Finglas. Now Im just saving my ass off. But it will be worth it in the end. I hope you are happy in your new home.:)

sheepshagger

texas star wrote:

I also got pulled out of the draw for an Affordable house. I got a 3 bedhouse in Finglas. It wont be ready till July/Aug. I cant believe my luck as I also work in Finglas. Now Im just saving my ass off. But it will be worth it in the end. I hope you are happy in your new home.:)

Well done Texas (esp working where you got drawn out for). . . as I was drawn out so soon I didnt have that much time to save (for extra stuff like fitting out the place etc) but it all pretty much sorted its self out in the end. . . as I say I'm very happy with it.

Hope all goes well as you get closer to the moving in date - believe me the saving your ass off now will all be worth it