Affordable Housing Clawback

Angel2016

So here is an update from today I spoke to a person in SDCC a very rude one at that and as soon as I mentioned the affordable housing claw-back he started trying to over speak me and kept interrupting me he said that the clawback is null & void and that anything over the price you paid for it goes to them so if my apartment sells for 155K and I paid 127K they get the difference ie. 28K !

I questioned him on it and he said look that is how it is you signed an agreement for the clawback and this way is more beneficial to you because other wise it would have been 33% of the whole sale price which I said that could not be correct because anything below 127k I would have paid out of my own pocket to a mortgage company so why would the council benefit from it, I told him that I was under the impression that it was 33% of the profits which would work out at just under 10K and he said no forget about that so I said I didnt remember signing any contract agreeing to 33% of the whole sale price which I honestly didn't so am going to ask for a copy of that contract.
He was very unhelpful and I am really annoyed at his attitude as all I was looking for was some help on the situation.
With all this taken into account after EA fees, maintenance fees, solicitor fees coming out of the balance which I would have received ie...the difference between 127K and what I owe which is 114K its not worth selling the place.

vandriver

For you to be any better off,the sale price would have to be over 191k.

Angel2016

vandriver wrote: »

For you to be any better off,the sale price would have to be over 191k.

It actually doesn't make a difference because according to the council anything over 127K goes to them regardless of whether its 155K or 191K they get it all as he says the clawback is null & void but I have asked for all paperwork for this and said I will get my solicitor to check this out because to me it doesn't make sense.

Turkish1

Angel2016 wrote: »

So here is an update from today I spoke to a person in SDCC a very rude one at that and as soon as I mentioned the affordable housing claw-back he started trying to over speak me and kept interrupting me he said that the clawback is null & void and that anything over the price you paid for it goes to them so if my apartment sells for 155K and I paid 127K they get the difference ie. 28K !

I questioned him on it and he said look that is how it is you signed an agreement for the clawback and this way is more beneficial to you because other wise it would have been 33% of the whole sale price which I said that could not be correct because anything below 127k I would have paid out of my own pocket to a mortgage company so why would the council benefit from it, I told him that I was under the impression that it was 33% of the profits which would work out at just under 10K and he said no forget about that so I said I didnt remember signing any contract agreeing to 33% of the whole sale price which I honestly didn't so am going to ask for a copy of that contract.
He was very unhelpful and I am really annoyed at his attitude as all I was looking for was some help on the situation.
With all this taken into account after EA fees, maintenance fees, solicitor fees coming out of the balance which I would have received ie...the difference between 127K and what I owe which is 114K its not worth selling the place.

Without getting too complex I would have thought it is quite straight forward.

You bought in 2008 for €127k which was 67% of the market value. Therefore the market value was €190k. Council contribution of €53k.

If you sell within 10years you are required to pay back the council in full.

So if you sell for €155k, you will pay off mortgage of €114k, costs - say €6k and the remaining 35k will go to the council and they will not chase you for the balance of €18k (€53k original council contribution less €35k paid back on sale).

Correct me if any of the above details are correct or if there is some other reason why you believe you should pay back approx €10k on an original agreement worth €53k?

Angel2016

Turkish1 wrote: »

Without getting too complex I would have thought it is quite straight forward.

You bought in 2008 for €127k which was 67% of the market value. Therefore the market value was €190k. Council contribution of €53k.

If you sell within 10years you are required to pay back the council in full.

So if you sell for €155k, you will pay off mortgage of €114k, costs - say €6k and the remaining 35k will go to the council and they will not chase you for the balance of €18k (€53k original council contribution less €35k paid back on sale).

Correct me if any of the above details are correct or if there is some other reason why you believe you should pay back approx €10k on an original agreement worth €53k?

I am getting my solicitor to look at it all, I am not trying to scam the council as your post suggests but I can tell you the council where given that building for little or nothing because they gave planning permission to Liam Carroll to build everything else and he then went bust hence all the property except this building going to NAMA.

What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else.

vandriver

"What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else."

So clearly this deal(ie payback of 155-127) is a better outcome for you.

Angel2016

vandriver wrote: »

"What I signed for was 33% of the proceeds of the sale which is around 41K and that is what I should be paying them back nothing else."

So clearly this deal(ie payback of 155-127) is a better outcome for you.

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

Jasper79

Angel2016 wrote: »

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

The proceeds from a sale would not exclude your mortgage. its the sales price minus sales costs . your mortgage is irrelevant in that regard. if that is was the agreement was for.

Graham

Angel2016 wrote: »

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

33% of the proceeds of the sale is about €51,000.

intheclouds

If you sold it and the council take the difference between 127k and 155k then you are still doing ok arent you?

You get 127k, which pays off your outstanding mortgage of 114k, plus costs and maybe leaves you with 10k after it all?

Why would you not go for that or am I missing something?

Angel2016

Graham wrote: »

33% of the proceeds of the sale is about €51,000.

The proceeds of the sale is 41K so 33% of that is € 13,530.00

Net proceeds is calculated by taking the sale price of a home and subtracting all selling costs. Typical selling costs include: Payoff of existing mortgages.

Approximately market value as of July 2016 = € 155K

Mortgage outstanding = € 114K
Difference € 41K
So its 33% of that

and the mortgage balance still gets paid off.

Jasper79

Angel2016 wrote: »

The proceeds of the sale is 41K so 33% of that is € 13,530.00

Net proceeds is calculated by taking the sale price of a home and subtracting all selling costs. Typical selling costs include: Payoff of existing mortgages.

Approximately market value as of July 2016 = € 155K

Mortgage outstanding = € 114K
Difference € 41K
So its 33% of that

and the mortgage balance still gets paid off.

No it doesn't Your mortgage has nothing to do with Sales proceeds, as above its sale price less sales costs

Angel2016

Jasper79 wrote: »

No it doesn't

I'm ending this thread because everyone is posting different opinions and posts and really its gone off topic now because I was looking for someone else who has been in this situation and could help me a little and that has not happened and prob wont because each person's case is individual and I will wait to see what the solicitor says.

Jasper79

Angel2016 wrote: »

I'm ending this thread because everyone is posting different opinions and posts and really its gone off topic now because I was looking for someone else who has been in this situation and could help me a little and that has not happened and prob wont because each person's case is individual and I will wait to see what the solicitor says.

I'm not posting opinion it's fact, you can easily google a definition of sales proceeds, but as you don't remember signing contract, are you sure what terms are.

As you've been advised if the terms are 33% of sales proceeds, you need to exclude your mortgage from your calculations.

Jasper79

Taken from the housing agency website link _http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home
See scenario 4 for your case :

xample of How the Clawback Works
John and Mary bought an affordable home. The market value of this property was €280,000, and they bought it at an affordable price of €196,000. So, the market value discount to John and Mary, which is known as the clawback, was 30%.

Scenario 1 – if they sell the home for less than the affordable price
If the market value of the home decreases below the original affordable price of the home, and the home is sold at this lower price, then no clawback is payable to the local authority.
Scenario 2: if they sell after 20 years
If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback to the local authority as the clawback charge is discharged after 20 years. However, they would have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.
Scenario 4 – if the market value of the affordable home increases:
If John and Mary sell their home for a higher amount than the original market value for example, €330,000 after five years, the clawback would be €99,000 (30% of €330,000). They would have to pay back €99,000 to the local authority. They would also have to repay any money owed to the mortgage lender to clear their mortgage.

intheclouds

Jasper79 wrote: »

Taken from the housing agency website link _http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home
See scenario 4 for your case :

xample of How the Clawback Works
John and Mary bought an affordable home. The market value of this property was €280,000, and they bought it at an affordable price of €196,000. So, the market value discount to John and Mary, which is known as the clawback, was 30%.

Scenario 1 – if they sell the home for less than the affordable price
If the market value of the home decreases below the original affordable price of the home, and the home is sold at this lower price, then no clawback is payable to the local authority.
Scenario 2: if they sell after 20 years
If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback to the local authority as the clawback charge is discharged after 20 years. However, they would have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 3 - If the Market Value of the Affordable Home Decreases
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000 less what they paid €196,000, which is €14,000. So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.
Scenario 4 – if the market value of the affordable home increases:
If John and Mary sell their home for a higher amount than the original market value for example, €330,000 after five years, the clawback would be €99,000 (30% of €330,000). They would have to pay back €99,000 to the local authority. They would also have to repay any money owed to the mortgage lender to clear their mortgage.

Scenario 4 is not what the OP is in. The market value has decreased.

It was 190k. Now its 155k.

Heffoman

I am currently in the same position and have gone sale agreed on my apartment. I and my solicitor have checked this quiet thoroughly and have verified it with Fingal County Council who we bought the property off.

Basically anything you get above the price you paid for your apartment is clawbacked by the local authority. So in my case the affordable price I bought the apartment at was €154,000. If the sale goes ahead anything I get above €154,000 is clawbacked by Fingal.

The only way you can make anything on this property is to keep it for the 20 years and sell it or sell it for more than its original market value. I.e in my case the original market value was approx €300k. So I would have to sell it over that price to make a profit. The balance I sell it over €300k would then be subject to my clawback percentage (33% I believe in your case or 50% for my property). As you can imagine that ain't ever going to happen.

I hope this helps. I like others had presumed I would make some profit on the balance above the affordable price if I sold it for that but no that is not how it works.

Angel2016

Heffoman wrote: »

I am currently in the same position and have gone sale agreed on my apartment. I and my solicitor have checked this quiet thoroughly and have verified it with Fingal County Council who we bought the property off.

Basically anything you get above the price you paid for your apartment is clawbacked by the local authority. So in my case the affordable price I bought the apartment at was €154,000. If the sale goes ahead anything I get above €154,000 is clawbacked by Fingal.

The only way you can make anything on this property is to keep it for the 20 years and sell it or sell it for more than its original market value. I.e in my case the original market value was approx €300k. So I would have to sell it over that price to make a profit. The balance I sell it over €300k would then be subject to my clawback percentage (33% I believe in your case or 50% for my property). As you can imagine that ain't ever going to happen.

I hope this helps. I like others had presumed I would make some profit on the balance above the affordable price if I sold it for that but no that is not how it works.

Thanks yes you are very good and clear in your explanation, I have decided to take it off the market and rent it out again at the going rate now and will once again become a reluctant LL and just be stuck renting myself.

Jasper79

intheclouds wrote: »

Scenario 4 is not what the OP is in. The market value has decreased.

It was 190k. Now its 155k.

Ah okay apologies OP.

Heffoman

Angel2016 wrote: »

Thanks yes you are very good and clear in your explanation, I have decided to take it off the market and rent it out again at the going rate now and will once again become a reluctant LL and just be stuck renting myself.

Unfortunately I could be doing the same myself. It was a bit of a shock when I found out what way the clawback worked. But at the end of the day I couldn't complain much as I got the apartment at a decent price.

Best of luck anyway.

foxatron

Ill give my 2 cents on what i think is correct. I looked into this a few years ago and this is my take on it.

Some people are bringing their mortgage into determining whats owed. Your mortgage is irrelevant in the calculation.
The 33% clawback is applicable on a current sale price that is over the original omsp valuation the council gave at time of purchase.
In ops case, current sale price of 155 is more than price paid but less than original omsp at time of purchase so any monies in between these values is given back to council.
If current sale price is less than what op paid then no monies are owed to council.
If current sale price is more than original omsp valuation than the clawback kicks in.
The whole reason for the system was to allow people buy reasonable priced accommodation but not be able to sell it for a profit.
There is no point having the clawback kick in between the original amount paid and original omsp valuation as theres a good chance the buyer will be left in a worse position than when they first purchased which again is not the intention of the scheme.
In ops case they owe the council the difference between 155k less 127k.
Not taking legel fees cost etc into account op will have 13k from sale. i.e. 127 less 114.
Again it will not be possible to sell for 114 as the council will look for a current valuation and want the property sold at that price.

That is how it works.

Angel2016

Heffoman wrote: »

Unfortunately I could be doing the same myself. It was a bit of a shock when I found out what way the clawback worked. But at the end of the day I couldn't complain much as I got the apartment at a decent price.

Best of luck anyway.

You too !
I will be stuck like most people renting a kip of a house and paying through the money with a horrible LL.

We are also thinking of going away it something we need to discuss because we don't feel Ireland has anything to offer us anymore.

pc7

Angel2016 wrote: »

We are also thinking of going away it something we need to discuss because we don't feel Ireland has anything to offer us anymore.

You got an asset at a reduced rate when many others couldn't. It's not all doom and gloom, especially if you can rent it out and have others pay for your asset.

Angel2016

pc7 wrote: »

You got an asset at a reduced rate when many others couldn't. It's not all doom and gloom, especially if you can rent it out and have others pay for your asset.

Others pay for my asset its not that simple there are taxes to be paid on rentals like income tax and CGT, property tax and maintenance fees so by the time all of that is paid out you just about break even and have the headache of tenants to go with it.

selastich2

It's good to see the scheme being implemented as intended. To be able to turn a quick profit on it goes against the whole etos of the scheme. The council should look in to taking a percentage of the rent if it's rented out.

foxatron

The scheme had its benefits as it allowed people to purchase a property at a reduced rate but it was short sighted in the fact that peoples lives change they get married have kids etc and need to get bigger properties. The only real way to make money on the affordable housing is to stay in it for 20 years.

Angel2016

selastich2 wrote: »

It's good to see the scheme being implemented as intended. To be able to turn a quick profit on it goes against the whole etos of the scheme. The council should look in to taking a percentage of the rent if it's rented out.

If it's not making the owner a profit then why should they when I had it rented out it actually cost me money because of tenants wrecking the place and anyway you pay income tax on the property so you are paying a percentage to the government anyway.

The etos of the scheme is gone out the door the council have changed all the rules around with the market gone the way it has the contract I supposedly signed is no longer valid according to the council now how is that okay.
These are the same council who sold apartments to people end of June 2008 and then gave planning permission to a restaurant to run as a pub the first week in July knowing full well they had just sold 60 apartments to people who I might add including myself had 5 years of torture living there with no sleep and stress and that was every night so forgive me if I have no empathy towards SDCC and want to move on.

Angel2016

<mod snip >
I have my mortgage with KBC Bank so not with the council so it would be them where the mortgage is cleared down.
The council have just advised me that I never signed a contract with them as it was an external mortgage so I would need to take a look at the contract with the mortgage company to see where I stand but they sent me a formula and told me what I have to pay them back if it sells for the 155K.

If I sell for 127400 they get nothing but anything over the 127432.00 goes to them.

intheclouds

I dont understand why you dont sell it for 155, pay the council the difference between 155 and 127 (28k), pay off your mortgage at 114k, cover whatever costs are involved and then walk away with a few k for yourself?

I didnt do an affordable scheme and I bought around the same time as you and if I sold now Id have to stump up some money to cover the negative equity - so you are in a better position than a lot of people seeing as you can walk away clear (and with a few quid).

pc7

Angel2016 wrote: »

Others pay for my asset its not that simple there are taxes to be paid on rentals like income tax and CGT, property tax and maintenance fees so by the time all of that is paid out you just about break even and have the headache of tenants to go with it.

Listen I'm a landlord unintended, I bought at market rates 12 years ago. if I wanted to sell now I'd be nowhere near market rates to break even, Thems the breaks!