Affordable Housing Rules Question

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Bananaman

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Hi Guys,

Dose anyone know what the position is with renting a property bought under the affordable housing scheme? Im not talking about buying it to rent out right away

But lets say 10-15 years down the road you inherit property and want to live there and rent the affordable one you have bought, is this OK? or do you have to sell up and pay any remaining claw back?

Thanks in advance
 
Hi Banaman,

I only know the situation with my Local Council and I believe it can differ slightly from one authority to the next.

The time frame that the clawback is in place for is 20 years and for each year from 11 - 20 it decreases by 10%. If you sell up in year 11 you have to pay 90% of the clawback due. If you sell up in year 19 you only pay 10% of the clawback, etc.

Once the property stops being your principal place of residence, your PPR, then you have to pay the clawback so, at least with my local authority, if you were to do what you suggested and move out and rent your affordable house then you would have to pay the clawback. I reckon you will always make some profit with an affordable property though and this system is surely better than someone getting a house and selling up straight away and making an enormous profit.

I am on the affordable housing route at the moment and am waiting for a decision shortly. Hope your quest goes well...!
 
That question has been playing on mind too. For example, if you decide to go traveling for 6-12 months can you rent without paying the clawback. Or, you need to move to a different part of the country for work, could you rent there and rent out your affordable property without paying the clawback?
 
Or if your circumstances change and the house becomes to small for your expanding family, can you rent it out then and get some place that bigger? Or do you have to Sell?
 
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Once the mortgage is being paid directly from your account, as always, then how will the council know the property is being rented? When I spoke with a lady at Fingal and asked her what would be the implications of a job move away from Dublin in say, 1 or 2 yrs, she didn't mention a clawback and muttered something about 'as long as the mortgage is paid'... I'm not condoning people 'buying to rent' immediately but if personal circumstances change....e.g. travel etc, I would imagine you don't have to sell up!? feel free to correct me please!
 
I can't understand why there would be a problem in renting out your property. Once the mortage is being paid. If you had a 2 bedroom property its ok to rent a room so why not to rooms. You might want to rent it for 2 years and clear loans or repay back more on the mortgage.
 
To my knowledge. you must keep the affordable home as your "Principle Place or Residence" for the duration of the mortgage, if you don’t then you will be in breach of a legal agreement. As for "how will they know" - you are legally obliged to register your property as a rental property if you do so, you are also required to pay tax on the income. Also, what would happen if your tenants burned your house down? Would you be insured? I'd also imagine that the county council will send you the odd letter during your 20 year mortgage!
 
Cheers guys, i suspected there might be a clause about the property being your Principle Place or Residence. Thanks for confirming! Still though it wont put me off.. fingers crossed i get offered something!
 
for your own sake, when you are made an offer you would be better getting your solicitor to have a look over the agreement before you sign it, I know I will be!
 
Hey anybody know wot the situation would be if you decided to take a year out of your mortgage to travel............
 
JohnJay said:
To my knowledge. you must keep the affordable home as your "Principle Place or Residence" for the duration of the mortgage, if you don’t then you will be in breach of a legal agreement. As for "how will they know" - you are legally obliged to register your property as a rental property if you do so, you are also required to pay tax on the income. Also, what would happen if your tenants burned your house down? Would you be insured? I'd also imagine that the county council will send you the odd letter during your 20 year mortgage!
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Not sure about that, there was a case in Cork in papers earlier this year about a hse been rented out by the owners and the council couldn't do anything about it.
Does it actually say about "Principle Place or Residence" in the legal jargon when you sign for the house?
I always thought that the rules were the same with an affordable as with any other hse purchase as you 'own' the house as a ppr.
Just like the stamp duty clawback if you rent it out within 5 yrs, the revenue will chase you.
Afaik, the clawback is only for the sale of the house..ie not affecting other rules.
 
Get a relative or friend to live in it for a discounted rent.
 
sorry - stupid qu but if the house wasn't eligible for SD when you bought it (less than 120 mt or whatever) what SD can they claw back (if you were to sell before 5 years is up)?
 
sorry, correction to my above post! if you were to RENT it out (not sell) before 5 years is up?
 
scatriona said:
sorry - stupid qu but if the house wasn't eligible for SD when you bought it (less than 120 mt or whatever) what SD can they claw back (if you were to *rent* before 5 years is up)?
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The 125sqm rule is for the purchase of a new property as a PPR. If you were to rent it out within the 5 years you'd owe the SD that would have been due as an investor when you first bought.
Under Floor Area of 125 sq. m
New houses or apartments which are purchased by an owner occupier (including a first-time buyer) where there exists a valid floor area compliance certificate issued by the http://www.environ.ie/ (Department of Environment and Local Government) stating that the total floor area of the house/apartment does not exceed 125 square metres are exempt, subject to clawback.
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Investors
New houses or apartments (whether under or over a floor area of 125 sq. m) which are purchased by investors are charged to duty on the entire price paid (exclusive of VAT) for the house or apartment.
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All info available from [broken link removed]
 
John Jay is right about not being allowed to rent out your entire property. This is to prevent people from profiteering from a scheme that is meant to help those on lower income buy a home of their own
 
Hi, if the house/unit is your Principle Place or Residence can you rent a room out using the government rent-a-room scheme??

thanks
 
I contacted DCC on this and they said its not allowed and that they're very strict about it.
 
I don't understand their logic :confused:

It's a government scheme...??

they will still be getting their clawback when the house/unit is sold, so what is the issue?
 
Sammie said:
I don't understand their logic :confused:

It's a government scheme...??

they will still be getting their clawback when the house/unit is sold, so what is the issue?
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The purpose of the scheme is to provide people who could not otherwise affod one, with a way of purchasing a home. The reason for the rule about renting is to ensure you are using it as a home and not an investment property.

There is no problem renting out a room but you still need to be living there.
 
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