Affordable Housing - Sale Price Restriction?

mlocmcgash

Hi,

Is there a restriction on the price someone can sell their affordable housing property for?

e.g. Market value at purchase = 400k, purchase price = 200k, market value now = 220k

Could it be sold for 200k to a friend (for example) or do people have to accept highest bid?

Also, can it be sold privately or does it have to go through an estate agent?

Thanks a million.

Kelly06

Just wondering why you would sell a property worth €220K for €200k?

The clawback percentage owed to the Council is calculated on the profit. So would you not be doing yourself out of money there?

If your figures up there are correct, and you've been in the house less than ten years then the % clawback would be 50% which would mean you would get 10k and the Council get 10k ! hope I did my sums correctly !

The_Conductor

It has to be sold at an open market selling price- you can't flip it to a family member/friend/colleague/ex at a discount- purely to cover yourself.

If its worth 220 (and to be honest- if you get it professionally valued- there are 2 others there that have sold since July for 265 and 270- so your suggested price is most probably significantly lower than the OMSP)- you have to sell it for the OMSP.

Dandelion6

Kelly06 wrote: »

The clawback percentage owed to the Council is calculated on the profit.

No it isn't, it's calculated on the full proceeds of sale. If you sell for below what was the supposed market value at the time you purchased it, there's no benefit to you how much "profit" you make because the Council will take it all anyway.

The_Morrigan

Dandelion6 wrote: »

No it isn't, it's calculated on the full proceeds of sale. If you sell for below what was the supposed market value at the time you purchased it, there's no benefit to you how much "profit" you make because the Council will take it all anyway.

Not in all cases...my contract specifically states the claw back is on any profit made, not the full sale price. This might have something to do with the percentage of my discount...mine was only 11% as I was in the higher end of the salary scales.

OP check your contract terms.

mlocmcgash

Thanks for the responses.

The_conductor, are you talking in general terms regarding recent sales in the area? What area are you talking about - do we know each other?

With regards to OMSP, where is it stipulated that it has to be sold at that price? What if no one wants to buy it, it just can't be sold until it's reached? It wouldn't make sense.

If a quick sale was sought (e.g. couldn't pay mortgage so needed to get rid) isn't it up to the owner what price they're willing to accept?

Any documentation around this would be great if it's available.

On the clawback, in this example, anything over 200k up to 400k would go straight to the council, anything below 200k and there's no clawback (that is documented by the council).

Thanks again.

Kelly06

So different councils seem to be operating the scheme in different ways? Some seem to be charging a % of the profit and others a % of the sale price?

Anyways the scheme is set out in the Housing (Miscellaneous) provisions Act 2002

9.—(1) In this section “purchaser” means a person to whom an affordable house is sold under this Part.

(2) Where an affordable house is made available for sale in accordance with this Part, the sale of the house to the purchaser shall, subject to subsection (3), be subject to any terms and conditions that the housing authority may specify, including terms and conditions relating to:

(a) notification of the housing authority by the purchaser of the proposed resale of the house;

(b) the occupation of the house by the purchaser.

(3) (a) The terms and conditions referred to in subsection (2) shall require, subject to paragraphs (c) and (d), that where an affordable house sold under this Part is resold by the purchaser before the expiration of 20 years from the date of sale to him or her, the purchaser shall pay to the housing authority an amount equal to a percentage of the proceeds of sale.

(b) The percentage referred to in paragraph (a) is calculated in accordance with the following formula—

Y × 100

Z

where—

(i) Y is the difference between the market value of the house at the date of sale to the purchaser and the price actually paid, and

(ii) Z is the market value of the house at the date of sale to the purchaser.

(c) The amount payable under paragraph (a) shall be reduced by 10 per cent in respect of each complete year after the 10th year during which the purchaser has been in occupation of the house as his or her normal place of residence.

(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.

The above section was later amended to include more information on the charging order and the registration in 2004 but I'm too lazy to go lookin for it! Maybe councils are doing it differently but I understood that the above was the way the scheme was supposed to operate

Dandelion6

Kelly06 wrote: »

the purchaser shall pay to the housing authority an amount equal to a percentage of the proceeds of sale.

Not the profit.

It may be that different rules applied to affordable houses sold at a very low discount, but this is the general rule. I don't believe different councils could apply the rule differently, unless of course some of them simply misunderstood it.

D3PO

No idea OP but Id tread carefully. Your essentially suggesting defrauding the council of 20k. Id imagine if that was ever discovered yourd be in a fair bit of hot water TBH.

mlocmcgash

D3PO wrote: »

Your essentially suggesting defrauding the council of 20k. Id imagine if that was ever discovered yourd be in a fair bit of hot water TBH.

I'm trying to understand if that's in fact true. The council aren't out of pocket if they don't get clawback (ie aren't at a loss) they just aren't making money. If it's not documented somewhere that the sale price has to be 'market value' then an owner should be able to sell at any price. And if it is documented, how can it be enforced as what if it won't sell at market value, etc, etc.

Peter File

mlocmcgash wrote: »

I'm trying to understand if that's in fact true. The council aren't out of pocket if they don't get clawback (ie aren't at a loss) they just aren't making money. If it's not documented somewhere that the sale price has to be 'market value' then an owner should be able to sell at any price. And if it is documented, how can it be enforced as what if it won't sell at market value, etc, etc.

Why are you even considering selling a house for below value that was heavily subsidised when you bought. It is shameful that you are looking at ways of effectively shafting the people who enabled you to purchase a house that you otherwise would not have been able to afford.

The_Conductor

Discussing this any further is moot- the Housing (Miscellaneous Provisions) Act and the Local Government Act- both state the clawback is a percentage of the sale price- so lets leave it there.