Selling affordable house at a loss?

Heya,

I have owned an affordable house for the last 3 years but due to circumstances may now have to move country. As the conditions say I'm not allowed to rent this property I have no other option but to sell.

I've read through some of the threads here and am looking for some confirmation.

Original market value was 360,000 and I took a mortgage of 140,000.
Approx 60% clawback

As prices have undoubtably dropped, I've seen similar apartments in complex at 280,000.
Will the council be looking for 60% clawback of 280,000 (184,000) and thus leave me 44,000 up the creek????

Other threads seem to think that the council will just clawback anything above the mortgage I took out, fine by me if I can break even!

Any thoughts greatly appreciated

Re: Selling affordable house at a loss???

You say you took out a mortgage of 160k but what price did you actually buy the property for?
You will have to look at the original contract/deed but in all likelihood the procedure is that assuming the sale price is above what you purchase the property for, you will get your sale price back and the council will get the balance ( this is for a situation where the sale price is less than the market value at the time of purchase)

Re: Selling affordable house at a loss???

Thanks Card

Got a mortgage of 140,000 and this is what I bought the house for.
So you reckon if I sold for 200,000 the council will just look for the balance i.e. 60,000

If this is so, thats great news, reckon I've paid off about 15,000 of mortgage at this stage. ie I owe the bank around 125,000, so, i'd get to keep that 15,000 i've paid off??

Thanks

Re: Selling affordable house at a loss???

The conditions on my contract are that the house cannot be rented out WITHOUT the permission of council.

Renting out for a period may be useful to you before fully committing to a your move abroad and sale of house.

Re: Selling affordable house at a loss???

exactly, but to make sure take a look at the documentation you would have received around the time of buying your house and which would possible also have been sent to you by your solicitor

Re: Selling affordable house at a loss???

Unofficially, i have been told that the council dont care what happens the house after the purchase. But its best not to abuse the system, and its not fair.
They tend to turn a blind eye to people that are moving country for a short period of time. It is your house and an investment so why should you not rent it out if you are planning to come back to ireland sometime soon.
It also depends ont he neighbours ratting you out and making an issue of it.

Re: Selling affordable house at a loss???

Hi folks,
I was looking into this only yesterday..... As far as I could make out if MV has decreased since the purchase the council will look for the claw-back % of the difference between the new market value and what you paid for it. In simpler terms 280 (proposed new MV) - 140 (affordable price paid) = 140k. Council will want 60% of this 140K back.
Well at least that's how I interpreted it...am I right in my interpretation or totally way off the mark??

Re: Selling affordable house at a loss???

Komori said:

Unofficially, i have been told that the council dont care what happens the house after the purchase. But its best not to abuse the system, and its not fair.
They tend to turn a blind eye to people that are moving country for a short period of time. It is your house and an investment so why should you not rent it out if you are planning to come back to ireland sometime soon.
It also depends ont he neighbours ratting you out and making an issue of it.

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He didn't say he was moving for a short period of time and affordable housing is not supposed be 'an investment'.

Re: Selling affordable house at a loss???

FTB1975 said:

Hi folks,
In simpler terms 280 (proposed new MV) - 140 (affordable price paid) = 140k. Council will want 60% of this 140K back.
Well at least that's how I interpreted it...am I right in my interpretation or totally way off the mark??

Click to expand...

I'm afraid it's not as good that. Council will want 60% of new market value, not market value minus affordable price. If clawback amount due would put purchaser in negative equity then this amount would be reduced to avoid that event.

In your example 60% of 280 = 168. This would leave you with just €112k. So the clawback would be reduced so that you could walk away with your original €140k, less solicitors fees etc.

Re: Selling affordable house at a loss???

FTB1975 said:

Hi folks,
I was looking into this only yesterday..... As far as I could make out if MV has decreased since the purchase the council will look for the claw-back % of the difference between the new market value and what you paid for it. In simpler terms 280 (proposed new MV) - 140 (affordable price paid) = 140k. Council will want 60% of this 140K back.
Well at least that's how I interpreted it...am I right in my interpretation or totally way off the mark??

Click to expand...

Your interpretation, contrary to what cheesus says, is correct. The affordablehomes.ie website clarifies this. It gives four scenarios concerning the clawback. The fourth deals with clawback in a declining market. The clawback is calculated on the new market value -the affordable price paid. The council will want 60% of 140k back.

Re: Selling affordable house at a loss???

should help answer your question.

"Scenario 4 - 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 €260,000 then the clawback would be based on the lower market value of €260,000 less what they paid €196,000, which is €64,000. So they have to pay back €64,000 to the local authority when they sell in addition to any money owing on their mortgage."



[broken link removed]

Re: Selling affordable house at a loss???

patricio said:

Your interpretation, contrary to what cheesus says, is correct. The affordablehomes.ie website clarifies this. It gives four scenarios concerning the clawback. The fourth deals with clawback in a declining market. The clawback is calculated on the new market value -the affordable price paid. The council will want 60% of 140k back.

Click to expand...

I'm afraid it's not. Scenario 4 details what happens in a falling market. New market value minus what was paid is what you'll pay back - not 60% of new market value minus what you paid.

Re: Selling affordable house at a loss???

wonder if this applies if you decide to buy the coucil out?

anyone know?

Re: Selling affordable house at a loss???

Are there any circumstances in which you could 'buy out' the councils clawback in your house?
I am only in mine 6 months and hope to be here a long time but would be interested to hear any info people might have. My clawback is 36.75% or something like that so a lot better than some peoples by the look of things

Re: Selling affordable house at a loss???

Just incase it helps, Im buying a AH right now and i was in the other with PP and asked specifically about this type of situation. They said that im completely protected by a sell a loss. That i cannot lose out of pocket if the property prices go down. He said there was legislation to protect clients from this type of situation.

Re: Selling affordable house at a loss???

theTinker said:

They said that im completely protected by a sell a loss. That i cannot lose out of pocket if the property prices go down. He said there was legislation to protect clients from this type of situation.

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Just to clarify, the legislation does not protect you if the property falls below what you paid for it. You will always have to pay off the mortgage you took out yourself. That's probably what you meant, but thought I'd add just in case.

Re: Selling affordable house at a loss???

I bought back my apt from the council, the claw back is the percentage of the market value at the point of when you wish to buy it back. No difference if the market falls. This is in your contract. if you had a 40% claw back you will be paying a claw back fee of 40% of what the property is worth, lets say 300k value, 120k, 300k+120K = 420 is what you would need to seek a new mortgage of.

That is why it is so important to know your claw back before signing any contact with the council. I had a claw back of only 126% and my apt was bought at 220k at the time, and I had to pay 35k to the council to buy them out, only way of me doing this was looking for a mortgage of 265k to include the money i owed them.