Affordable Housing - Clawback - under answered

Hi,

there has been many questions about clawback and what people need to pay or not pay and i can still not get a correct answer, also noticed that alot of the information about affordable housing is gone.

here is my situation.

Market value in 2009 was 420k
purchased price in 2009 was 260k
clawback 38%

Jump forward to today 2014

Market value 270k
mortgage owing 248k

So how i see the clawback percentage is now 9% (248 % of 270)

so i see for 270-260=10-9% = 900 owed to Council and i get reminding 9100

or
so i see for 270-260=10-38% = 3800 owed to Council and i get reminding 6200

is my think right here. from what i can find on http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home

The clawback is based on the percentage discount you got when you bought your affordable home. If you decide to sell your home, the local authority applies this percentage to the price you get for the sale, depending on the current value of the property. Depending on the value of your property when you sell it, the calculation of the clawback may vary

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also presume that the calculation does take in for account the amount i have already paid off the 260.

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.

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but this calculation doesnt include the clawback percentage just the whole lot.

its all very confusing and nobody has answer.

It would seem that scenario 3 applies, so you owe them €10,000

If you sell for 270, the split of the proceeds is as follows
Council 10
Bank 248
You 12

The clawback percentage doesn't change, so really the Council should be owed 38% of the sale price (102K), but they settle for whatever is gotten over the affordable price.

If you achieve a quick sale for €259,950 would you owe nothing?

This is how to calculate clawback:
Resale price - actual price paid = profit or loss on the property.

If there is a loss then there is no clawback.
If there is a profit you multiply it by the % clawback to get the amount you owe the council.
The amount outstanding on the mortgage does not affect the amount you might owe the council but does of course affect whether or not you will still owe the bank money when the house is sold.
In your case the calculation is:
270-260 = 10k profit.
As clawback is 38% you will owe the council €3,800.

"If you achieve a quick sale for €259,950 would you owe nothing?"
If the council feel that you are selling the house below current market value they can look for the clawback to be based on the market value and not the actual sale price.

The calculation in Scenario 4 on the www.housing.ie website is currently incorrect.

All of this is conjecture until such point that you have the house sold. It depends on the council you are dealing with and the strength of your solicitor.
We sold last year and the council wanted to apply the usual formula of calculating the clawback. It would have meant that we could have paid up to €40k just on the clawback plus the balance of our outstanding mortgage. But as the final sale price was still well below the original price of €172k our solicitor argued our case and we settled for the balance of the outstanding mortgage plus €7k.
It was the unclear understanding within the council that won it for us as our solicitor argued that how could the council apply a formula that the staff in the housing dept didn't understand themselves. It took a while to get our answer but we stuck to our guns and won through.

promoter said:

This is how to calculate clawback:
Resale price - actual price paid = profit or loss on the property.

In your case the calculation is:
270-260 = 10k profit.
As clawback is 38% you will owe the council €3,800.

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This is incorrect. Clawback % is calculated using the current market value, not the profit achieved in the sale. Where the current market value has fallen below what the original market value was, but is still greater than the affordable price paid, the clawback is calculated by subtracting the original affordable price paid from the current market value. In this case claw back would be €10k. This is scenario 3 on http://www.housing.ie/Housing-Information/Home-Ownership/Living-in-an-Affordable-Home.aspx . Calculations on scenario 4 are correct now, perhaps they weren't when you posted.

You can only make a profit on an affordable property in the first 10 years of ownership if the current market value of the property is greater than the original market value.