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Negative Equity - Affordable Housing

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Comments

  • #32
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    jackal wrote: »
    Yes unfortunately people confuse affordable with social housing.

    Very true- most people seem to have terminal confusion between the different schemes.

    My big problem with Affordable Housing- is why is it necessary? Just under 70% of the adult population qualify for affordable housing. Surely this statistic alone should be ringing alarm bells loud and clear? The problem is not that people need assistance towards purchasing property- its that property is still far above "normal" pricing levels.

    Social Housing, an entirely different proposition, I have no issues with.


  • #33
    collegeme
    Registered Users, Registered Users 2 Posts: 512 ✭✭✭collegeme


    smccarrick wrote: »
    With the Affordable Housing Scheme, the council simply sell you the property at a discounted price (as opposed to the Shared Ownership Scheme where the council continues to hold equity in the property).

    If the sale price rises above the original stated market value, when you sell the council get the clawback percentage of the profits. However if the price falls and a clawback due on the sale of the property (excl. fees such as solicitors etc) would put the seller in a negative equity position- no clawback is due to the council. The seller simply gets the price paid by the new purchaser of the property, and nothing is owed to the council (but obviously the seller suffers a loss, being the difference between their original Affordable Price, and their new sale price). The seller is also responsible for any outstanding mortgages or liens which may be placed on the property.

    The manner in which clawbacks are calculated is spelt out in Section 99 of the Planning & Development Act 2000 and the Housing (Miscellaneous) Provisions Act 2002, s.9.

    Under control of sale of affordable homes, section 3, in relation to the clawback, it states:



    This means simply that the clawback cannot put you in negative equity- not that the council will give you an additional topup cheque to cover the difference between what you actually paid and the price you are now able to achieve.

    This is spelt out here (specifically Clause 9 (3) (d))

    As the property falls in value the clawback is eaten away, until you reach the price you actually paid- at which time you enter negative equity yourself.

    This is one of the reasons we have been harping on at people to get accurate valuations put on AH properties before signing the paperwork..........


    I have had many problems over the years with the council (Fingal) not knowing their arse from their elbow.
    Can i please ask a question?

    We purchased a home with Market Value of €165,000 for €127,000 10.1 years ago with a 23% clawback.
    If we sell we could possibly get €125,000 meaning we are selling for less than we bought. Do we owe a clawback based on the fact that we actually owe about €80k?
    My reading of it is that the clawback doesn't apply since it would reduce the amount received below the price paid??
    But technically we are not in negative equity.


  • #34
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Your interpretation is basically the intent of the scheme.

    The OP's query differs- because they availed of two separate schemes- the Affordable Housing (AH) scheme and the shared ownership scheme. In their case the portion of the purchase price covered under the Affordable Housing scheme does not attract a clawback under the act. The portion of the purchase under the shared ownership scheme most certainly would however.

    Unfortunately you are going to have to liaise and bargain with the council- as the different councils seem to have applied the schemes in different manners- Fingal has much in common with some of the other councils who saw it as a manner of clearing the property overhang- before the market fell off the cliff.

    Liaise with the council- and if you're unsatisfied- you need professional advice.


  • #35
    Turbulent Bill
    Registered Users, Registered Users 2 Posts: 1,631 ✭✭✭Turbulent Bill


    collegeme wrote: »
    I have had many problems over the years with the council (Fingal) not knowing their arse from their elbow.
    Can i please ask a question?

    We purchased a home with Market Value of €165,000 for €127,000 10.1 years ago with a 23% clawback.
    If we sell we could possibly get €125,000 meaning we are selling for less than we bought. Do we owe a clawback based on the fact that we actually owe about €80k?
    My reading of it is that the clawback doesn't apply since it would reduce the amount received below the price paid??
    But technically we are not in negative equity.

    If it was a 'straight' AH purchase (i.e., no shared ownership with Fingal), you shouldn't owe any clawback. The clawback mechanism is based purely on the purchase and sale prices of the property, not what your mortgage balance is.

    As the sale price is below what you originally paid, no clawback is due. If you sell for €125k and clear the €80k mortgage, you'll be left with €45k.

    As smccarrick said, it's a good idea to liaise with Fingal on this to clarify, but you're on solid ground legally.


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