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Renting out an 'affordable' house

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  • 31-01-2011 5:46pm
    #1
    gazzer
    Registered Users Posts: 4,049 ✭✭✭


    A friend of mine has an affordable house and what with recent tax increases, been out of work sick and other unexpected financial expenses etc he is finding it pretty hard to pay the monthly mortgage. So far he has not missed a payment (has the mortgage 4 years) but he knows that it will become an issue in the next few months (he has been using savings to pay the mortgage but that is about to run out)

    One of the rules of the affordable housing scheme is that you cannot rent out your house. I suppose it is to make sure that the people who buy the house are doing it to live there and not make a profit by renting it out.

    However what happens if for instance the home owner needs to move to another part of the country for work reasons and has to rent there. He/she would need to rent out their mortgaged house in order to pay the mortgage.

    Dublin City Council have told my friend that IF he rented out the house they would turn a blind eye to it but that 'officially' it is not allowed. However it is my understanding that to rent out a house you have to be registered with the PRTB. Surely the PRTB would want to go ahead from DCC to allow my friend rent out a house.

    I know that Fingal County Council are allowing affordable housing owners to rent out their houses now in certain circumstances but it seems the other county council have not brought this in yet.

    My friend doesnt want to make a profit from renting out his house, he just wants to ensure that his mortgage is paid every month. His plan was to rent the house out and move in with a family member. He placed an ad on a few websites to rent out a room but hasnt had any concrete offers. He feels that he might have a better chance in renting the whole house out.

    His other option I suppose is to remortgage the house with a Bank so that he is not tied up with DCC anymore. However with lending restrictions how feasible would that by (he has a mortgage of €150,000 and a salary of €35,000)

    Thanks


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    #2
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    gazzer wrote: »
    His other option I suppose is to remortgage the house with a Bank so that he is not tied up with DCC anymore. However with lending restrictions how feasible would that by (he has a mortgage of €150,000 and a salary of €35,000)
    I'd be surprised if there wasn't a clause to stop this, to prevent someone getting the house, and selling it on for profit?


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    #3
    MRBEAVER
    Closed Accounts Posts: 206 ✭✭MRBEAVER


    The current situation seems to be that Councils are turning a blind eye to the renting out of affordable houses even though it is officially not allowed. The PRTB will not pass on details to the Council if he registers although lots of landlords don't register.


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    #4
    Dandelion6
    Registered Users Posts: 1,405 ✭✭✭Dandelion6


    the_syco wrote: »
    I'd be surprised if there wasn't a clause to stop this, to prevent someone getting the house, and selling it on for profit?

    I think in that situation you have to repay the clawback to get out of the conditions.


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    #5
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    If he rents it out, it becomes an investment property. If I was renting the house, i'd want my rights protected by the PRTB. In this case, from above posts, suggestions of one council or the PRTB bending the rules seems not fair on anyone else in a similar situation who have to go through the legal route.

    Also, why can he not sell it? Negative equity and clawback?


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    #6
    listermint
    Registered Users Posts: 33,931 ✭✭✭✭listermint


    gurramok wrote: »
    If he rents it out, it becomes an investment property. If I was renting the house, i'd want my rights protected by the PRTB. In this case, from above posts, suggestions of one council or the PRTB bending the rules seems not fair on anyone else in a similar situation who have to go through the legal route.

    Also, why can he not sell it? Negative equity and clawback?

    I dont believe you are allowed sell for something like 10 years, to insure owners live in the area and generate community living rather than high turnover rate of ownerships.


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    #7
    Victor
    Registered Users Posts: 78,392 ✭✭✭✭Victor


    MRBEAVER wrote: »
    The current situation seems to be that Councils are turning a blind eye to the renting out of affordable houses even though it is officially not allowed. The PRTB will not pass on details to the Council if he registers although lots of landlords don't register.
    Actually, the PRTB pays council housing departments to inspect a certain proportion of properties each year.


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    #8
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    listermint wrote: »
    I dont believe you are allowed sell for something like 10 years, to insure owners live in the area and generate community living rather than high turnover rate of ownerships.

    I've heard of that alright. Why can't the owner who is in financial straits contact the council and arrange a reduced repayment schedule on the mortgage until they are on their feet again?


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    #9
    irlrobins
    Registered Users Posts: 7,541 ✭✭✭irlrobins


    Because the mortgage isn't alwasy provided by the council. Many are provided by the banks, with the usual terms and conditions applying.


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    #10
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    irlrobins wrote: »
    Because the mortgage isn't alwasy provided by the council. Many are provided by the banks, with the usual terms and conditions applying.

    Negotiate with the bank then? (just like non-affordable housing customers)


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    #11
    gazzer
    Registered Users Posts: 4,049 ✭✭✭gazzer


    gurramok wrote: »
    If he rents it out, it becomes an investment property. If I was renting the house, i'd want my rights protected by the PRTB. In this case, from above posts, suggestions of one council or the PRTB bending the rules seems not fair on anyone else in a similar situation who have to go through the legal route.

    Also, why can he not sell it? Negative equity and clawback?

    Well selling the house is another option he is looking at. Unfortunately what the council value the house at and what an estate agent value the house at widely differ so if he puts the house on the market and is lucky to get a buyer he may run the risk of having to pay the difference between the councils valuation and the sale price.

    He has spoken to the council about reducing payments and they said that they 'might' let him pay interest only for 6 months. That would be a great help but after 6 months he would be back to square one. He (like a lot of people) is just worried that with further paycuts and budgets down the line that even if he is only paying an interest only mortgage it will be still too much.


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