Affordable Housing Questions

M

mac198

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Hi Folks

Been reading here a while now but not sure if these questions have been posted up before. I've applied for the Affordable Housing in the Dun Laoghaire and like some of the applicants on here was interviewed last week. Was just talking to someone about it this evening and they were telling me some things that sounded worrying. Just wanted to see if anyone else had heard the same?

1. Say I purchase an affordable home and live there for a number of years. Down the line I decide to purchase another property for investment purposes to rent out. I have been told that because I have bought an affordable home it stops me from ever buying another property again - is this correct?

2. Does the fact that I may be buying an affordable home have an impact on my Credit Rating? Will I have a worse off Credit Rating in the future because I have an affordable home?

I heard some things along these lines this evening which would be worrying to be honest if true.

Is there anyone out there who went through the Affordable process that would have anything negative to say about it? I understand the clawback and that I can never change mortgage provider or release the equity in my home but is there anything else? I understand all the pro's but theres not that much out there about the cons. Any feedback would be greatly appreciated.

Thanks a million
 
I don't know who you've been talking to but they couldn't be more wrong. I don't even know where to start. It's just all wrong.
 
I agree, I dont know who you have been talking to but they are completely wrong, the only thing that is different is the fact that you have to pay a clawback and you cannot rent the house out as it is supposed to be your primary residence (you can rent a room though).
I have my house now for 5 years and I have never looked back. It does look like there will be some work done on the whole area of remortgage/mortgage switching as there is a lobby out there to get those rules changed other than that I would highly recommend the scheme for those for whom it is aimed, people who would not be able to buy on the open market!

B
 
I appreciate the responses folks. I had been expecting that it was wrong but I didnt know anyone who had gone through the process etc. so thats why I came here. I always hear the positives about it but never hear anyone saying anything bad about it which always sets alarm bells off in my head!

Just one other question? What happens if you are out of the country for an extended period? If you dont actually have a principal primary residence in Ireland? I know there are rules taken into account if you are out of the country for work reasons that are taken into account for gains tax calculations if you are selling. Is there anything similar with the Affordable scheme?

Thanks again
 
Im just about to finalise on my apartment with the Affordable Housing Initiative! Whoever you got your info from would want to get their facts correct..they couldnt be more wrong! The process is fantastic for people like myself who earn a decent enough salary but just cant quite get there on affording a "normal" mortgage! The only problem ive had has been trying to sort out the the market value on my property which was too high at the time of accepting. The AH process is confusing to get your head around as each council seems to work off their own rules, so get a general overview of what to expect then only seek out info related to Dun Laoigahire/Rathdown CC or South Dublin CC,if theyre the same as you will just confuse yourself.
To answer your questions..no, buying an AH property doesnt affect your credit rating, unless you dont pay your mortgage on time,same as buying any other property. Also, you can buy as many properties as you like if you can afford it, but my guess if you're getting an AH place then you'll be just about able to manage that!
If you get a place that you like, try and be objective and think of the long term picture. Think at least 10 years down the line as you shouldnt go into this with the idea that its a money making scheme or anythin like that. Its a great way of young people like us getting on the property ladder in an otherwise mental housing market!
 
mac198 said:
I appreciate the responses folks. I had been expecting that it was wrong but I didnt know anyone who had gone through the process etc. so thats why I came here. I always hear the positives about it but never hear anyone saying anything bad about it which always sets alarm bells off in my head!

Just one other question? What happens if you are out of the country for an extended period? If you dont actually have a principal primary residence in Ireland? I know there are rules taken into account if you are out of the country for work reasons that are taken into account for gains tax calculations if you are selling. Is there anything similar with the Affordable scheme?

Thanks again
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I'm not sure about this, the house has to be your PPR. If this situation changes then what are you going to do with your house? leave it empty and still pay your mortgage? Basically you can't rent the house out, otherwise you have to pay the clawback. You should ask the council directly they should be able to clarify it for you.
 
Sammie said:
I'm not sure about this, the house has to be your PPR. If this situation changes then what are you going to do with your house? leave it empty and still pay your mortgage? Basically you can't rent the house out, otherwise you have to pay the clawback. You should ask the council directly they should be able to clarify it for you.
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I spoke with the council this morning about this. Basically if you are out of the country for say a year it increases the clawback period by a year (from 20 to 21 years). The guy I was talking to said that you could rent the whole property out once you had no other PPR in the country and the only drawback was the increased clawback period. As long as you are not "living somewhere down the road" as he put it is ok. He also answered the question about future mortgages saying that an affordable property doesnt stop you from getting future mortgages. He wasnt sure about the Credit Rating one and I have raised this with the Bank I am speaking to about the mortgage.

The way it was put to me that raised my worry was that say you buy an affordable property for 250k that has a market value of 400k. Because of the Credit check that the council do with you, you end up with a "debt" on your credit history of the 150k to the council. Equivalent to defaulting on payments of up to 150k. The person who was telling me this had said that he had guys working for him who bought affordable homes who were then even refused Credit Cards due to this. It seems very strange but its something I'd like to be clear on before going any further!

Thanks for the responses!!
 
Something like that never even crossed my mind....

If you get any response, can you please post it, cause that'd be very worrying indeed.......

I'd've thought one of our solicitors would've highlighted this if it was a serious issue, but I suppose....the scheme isn't really old enough (not sure actually, now that I'm typing it...!) to have had many sales go through?!

Hmmm....

:confused:
 
mac198 said:
I spoke with the council this morning about this. Basically if you are out of the country for say a year it increases the clawback period by a year (from 20 to 21 years). The guy I was talking to said that you could rent the whole property out once you had no other PPR in the country and the only drawback was the increased clawback period. As long as you are not "living somewhere down the road" as he put it is ok.
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I would never rely on someone who works in a County Council for tax advice. You should be paying a qualified tax advisor for information, not relying on someone over the phone working in the county council, or the guy in the pub.

Your guy from the council neglected to mention the fact that you would probably be liable a stamp duty clawback once you start renting the place. This will be charged at the rate an investor would have paid on the property (and presumably at the non-discounted price of the property) This would equate to somewhere in the region of 25K (on 400K) and would be liable from the day you start renting and would attract interest on a daily basis thereafter if not paid.
 
mac198 said:
The way it was put to me that raised my worry was that say you buy an affordable property for 250k that has a market value of 400k. Because of the Credit check that the council do with you, you end up with a "debt" on your credit history of the 150k to the council. Equivalent to defaulting on payments of up to 150k. The person who was telling me this had said that he had guys working for him who bought affordable homes who were then even refused Credit Cards due to this. It seems very strange but its something I'd like to be clear on before going any further!

Thanks for the responses!!
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I really don't understand what you are saying?! Any credit check by any institution is recorded but how can it be equivalent to defaulting on payments up to €150K????
If you get a mortgage with a private lender, i.e. a bank, instead of the council is this recorded differently????? very confused here.

Also, if say for example someone was to go away for a year and rent out the property for a year then stamp duty has to be paid because it is viewed as an investment property....... is the % stamp duty to pay calculated on what the buyer bought the house for or the actual house price????

last question. After 10 years the clawback starts being reduced by a certain % each year until it is at zero % at year 20. If an extra year is added on to this because of the year away does the clawback start being reduced still at year 10 or year 11...????
 
Sammie said:
I really don't understand what you are saying?! Any credit check by any institution is recorded but how can it be equivalent to defaulting on payments up to €150K????
If you get a mortgage with a private lender, i.e. a bank, instead of the council is this recorded differently????? very confused here.

Also, if say for example someone was to go away for a year and rent out the property for a year then stamp duty has to be paid because it is viewed as an investment property....... is the % stamp duty to pay calculated on what the buyer bought the house for or the actual house price????

last question. After 10 years the clawback starts being reduced by a certain % each year until it is at zero % at year 20. If an extra year is added on to this because of the year away does the clawback start being reduced still at year 10 or year 11...????
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I was confused myself Sammy so hence why I posted up here. It was put that essentially you are in debt to the council to the difference between the purchase price and the market price of the property and that this would be held on your credit record in a negative way. Something to do with the credit check / background check that the council does on you now lowers your credit rating in some way.

To answer your last question, the way it was said to me was that the year you are away is like a frozen year. If you go away at the start of year 7, then year 7 doesnt continue until you are back living in the property!
 
ah I see! that is very interesting indeed. So in theory this should be on an ICB credit report?????
I really don't think this is the case....sure no one would be able to get any future loans even if their financial cirucmstances changed and they earn a lot more money, paid off all their loans and all they are paying is their mortgage repayments!!
very confusing. Why is all of this not published on the affordable housing website???

mac198 - what county council are you talking about here? thanks
 
there is only a clawback on stamp duty if the property is rented within the first five years, so if it was rented for year 6, 7 etc there would be no stamp duty due.
 
Sammie said:
ah I see! that is very interesting indeed. So in theory this should be on an ICB credit report?????
I really don't think this is the case....sure no one would be able to get any future loans even if their financial cirucmstances changed and they earn a lot more money, paid off all their loans and all they are paying is their mortgage repayments!!
very confusing. Why is all of this not published on the affordable housing website???

mac198 - what county council are you talking about here? thanks
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Its Dun Laoghaire Rathdown I have applied to. Sammy, in theory I think it should but at the same time, like yourself, I dont think this will be the case. I've queried it with a Bank as I said and I'll post up what they tell me. They've referred it on to their underwriters I think.

I'd imagine if this was true, we would have heard about it before. In relation to the affordable housing website, I've actually learned more by reading boards like this than something like their website!
 
And your thoughts on the stamp duty clawback? That, to me, is the more pressing issue. ICB credit check is simply a matter of talking to the right person and won't really affect you. Forking 25K will.
 
Howitzer said:
And your thoughts on the stamp duty clawback? That, to me, is the more pressing issue. ICB credit check is simply a matter of talking to the right person and won't really affect you. Forking 25K will.
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Not sure if that was meant for me. If it was, it was only a hypothetical situation I was thinking of down the line if I ended up in a job that meant I had to work abroad. Its definitely something that would discourage me from it but then regardless of what type of property you have you would liable for it. Unless your employer will increase your wage to the extend that you can still afford the mortgage repayments and means you dont have to rent the place out :D unlikely I know!

However, I had not heard of the 5 year rule that Lin83 mentions so if that is how it works then its not the end of the world for me.
 
Can anyone explain this stamp duty thing on clawback...ive never heard of this before!!
 
swordshead said:
Can anyone explain this stamp duty thing on clawback...ive never heard of this before!!
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affordable housing clawback = the difference in price, in %, of what you bought the house off the council for and what the house is acutal worth.
So if you sell the house for X the council get X * clawback% divide by 100. Many examples on their web sites.

stamp duty clawback = if you rent your house out within 5 years of purchasing it you have to pay this...not sure what the % is. this is across the board to everyone who owns a house, not just affordable housing.
 
if you purchase a property and pay no stamp duty as a ftb then subsequently rent it out within 5 years you are liable to stamp duty at what would have been due at the time of purchase had you not been a ftb, if you did pay stamp duty but at a lower rate as a ftb then you would be liable for the difference between the lower ftb rate and what you would have had to pay as a non ftb/investor .. make sense??
 
mac198 said:
Hi Folks

Been reading here a while now but not sure if these questions have been posted up before. I've applied for the Affordable Housing in the Dun Laoghaire and like some of the applicants on here was interviewed last week. Was just talking to someone about it this evening and they were telling me some things that sounded worrying. Just wanted to see if anyone else had heard the same?

1. Say I purchase an affordable home and live there for a number of years. Down the line I decide to purchase another property for investment purposes to rent out. I have been told that because I have bought an affordable home it stops me from ever buying another property again - is this correct?

2. Does the fact that I may be buying an affordable home have an impact on my Credit Rating? Will I have a worse off Credit Rating in the future because I have an affordable home?

I heard some things along these lines this evening which would be worrying to be honest if true.

Is there anyone out there who went through the Affordable process that would have anything negative to say about it? I understand the clawback and that I can never change mortgage provider or release the equity in my home but is there anything else? I understand all the pro's but theres not that much out there about the cons. Any feedback would be greatly appreciated.

Thanks a million
Click to expand...

Has anyone got the answers to these questions since?
 
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