How to calculate the clawback for an affordable property when the value decreased?

roots

Hi,
I would be interested to hear if anyone knows how to calculate the clawback when the actual property value decreased??

In the examples I have seen on the councils web sites they only talk about your property gaining value.

Lets say that I bought a property worth 200k at a price of 100k. Then the clawback is 50%.
In their example, if you sell it with 300k you make a profit and you'll share it with CC.

But what happens when the property you own can only sell for 150k? how do we calculate the clawback then?

Thanks a lot if someone could explain. I searched already this forum but I couldn't find anything to answer this.

heebusjeebus

Why should you be allowed "clawback" lost value in the house?
Seems unfair to me considering you got an affordable house in the first place.

Ste.phen

I think he meant how much would he have to pay to the council if he sold it early, given that its value has dropped.

As far as I know nothing. If you *lose* money on the transaction they let you off the hook.

Emerald Lass

it varies from council to council how they calculate the clawback amounts, so I would recommend talking to someone in your area council. Ask them for an example with a value closer to what it is worth now.

Also one point in regards to buying out your council - if you have a council loan then you can apply for additional subsidies in addition to the normal tax incentives. For example if you are with fingal and you earn under €26,000 then you get your mortgage subsidised. Another thing is because Affordable housing is a form of social housing, should you ever be unable to repay your mortgage, then it is much harder for them to evict you and repossess your house than it would be for a bank. Even if they did take the hosue back, as they are a government body, there is some clause saying that the government cannot make you homeless, so if the council took your house back then they would have to find you suitable alternative accommodation rather than have you on the street. A bank wont do this.

In the current climate these are all things to think about - if you lost your jobs (touch wood it wont happen) but if you did its a lot less pressure if your loan is with the council. I bought out my affordable loan a while ago, and now I am wishing I didn't, with the way the economy is.

Having said all that, if you are in a relatively secure position job wise etc, then now is a good time to buy them out without having to hand over a large clawback fee.

Del2005

roots wrote: »

Hi,
I would be interested to hear if anyone knows how to calculate the clawback when the actual property value decreased??

In the examples I have seen on the councils web sites they only talk about your property gaining value.

Lets say that I bought a property worth 200k at a price of 100k. Then the clawback is 50%.
In their example, if you sell it with 300k you make a profit and you'll share it with CC.

But what happens when the property you own can only sell for 150k? how do we calculate the clawback then?

Thanks a lot if someone could explain. I searched already this forum but I couldn't find anything to answer this.

You're still making a profit of 50k on this. You only have to get a 100k loan so if you sell for 150k then there is still a profit. Or am I missing something here?

roots

In one of their example they say:

Let’s say you purchase a new apartment (which has a market value of €200,000) for €160,000. We have therefore provided you with a discount of 20%.

Let’s say that you then sell this property, within 10 years, for €300,000. SDCC will be due 20% of €300,000 (which is €60,000). It is as simple as that!

but the question I asked is if the house market value dropped to let's say 150k in my example above, what's the money that the Council will get?

If the clawback stays at 50% as in my example then according to the example above it means 50% x 150k=75k. This only leaves the owner with 75k and the bank is looking to get back their 100k that the mortgage was worth.

Are they taking the 75k regardless of the loss that the house is after seeing?
And what if the house value drops to the value you paid (i.e. 100k) that means the CC will ask for 50k and who pays the difference to the bank? Is there a win-win situation for CC regardless of market variation?

In the examples councils only give you market gain to your property but never take into account that your house value might depreciate as well...

Thanks to all who can express their opinion here.

roots

@ del2005

You're still making a profit of 50k on this. You only have to get a 100k loan so if you sell for 150k then there is still a profit. Or am I missing something here?

I have no problem to hand over all profit if there is any to CC, don't take me wrong, I'm not looking to walk out with any profit at all if the house is depreciating...
But if you add up the 50k profit and the fact that the clawback is 75k, there will be a difference of 25k...

Del2005

roots wrote: »

@ del2005



I have no problem to hand over all profit if there is any to CC, don't take me wrong, I'm not looking to walk out with any profit at all if the house is depreciating...
But if you add up the 50k profit and the fact that the clawback is 75k, there will be a difference of 25k...

Thanks I thought I was missing something. TBH the only way you'll get the correct answer is to ring the CC where you got the house and ask them. All anyone here can do is offer advice or speculate and I wouldn't want to be relying on advice from an internet fourm over 25k that no one can afford to loose.

Moznips

hi

i'm selling my affordable housing too. i rang the cc and advised them of same.
i purchase the property at 160k and have been advised by esate agent that i can expect an offer from about 190-195k.
when i rang the council and asked them about the clawback conditions and how much id owe, the guy said i won't owe anything (even though they had valued my place at 317k two years ago!
if i sold for 190k - the difference of 30k is split between the cc and myself. i've written to them on this just to get clarfication.i suppose after estate agents fees and solictors i might come out with about 10k which in these times i am truly grateful for.
JUst a note - i;m not selling my property to make a profit. i have sound proofing issues with my place which has forced me to sell. neither the builder nor cc will do anything. i have put 20k into my place as i thought i'd be living there for years and years....
once the property is sold i;m back renting.
best of luck in selling ur place.