AH and selling above purchase price

N

Not_near_it

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Hi all,

I did a search but most of the threads are old at this stage and I'd like to get some up to date information.

I bought an AH in 2009, I paid a discounted price of 265k for it down from 360k.

I would like to sell as I'm in the early stages of moving abroad.

The market has increased a fair amount this year and the valuations I've been given are between 259-279k.
If I sold at the upper end of the valuations say 280k, what liability would I have to the council?

Thanks :)
 
Brooklyn said:
If you sell within ten years, your liability is equivalent to the percentage discount you received on purchasing the property. So if you bought the property at a 25% discount of the market value, your liability is 25% of the difference between the price you sell it for and the price you paid for it.
Click to expand...

Ok, getting somewhere now :)

I bought for 265k, selling for aprox 280k, I had a 26% discount.

So I owe 26% of 15k?
 
vandriver said:
According to this you owe the full difference between the selling price and the purchase price (ie 15k)
Click to expand...

Yes, scenario 3.

But my solicitor told me I need to hand over any balance of money I would have left after clearing my mortgage.
Example, if i pay the council the 15k as per the scenario below and I have 20k left after clearing the mortgage, the council takes that 20k!
I can't see how this is correct?


Scenario 3 - If the Market Value of the Affordable Home Decreases
Not_near_it sells his home and the market value has decreased from €3600,000 to €280,000 then the clawback would be based on the lower market value of €280,000 less what they paid €265,000, which is €15,000. So he has to pay back €15,000 to the local authority when they sell in addition to any money owing on their mortgage.
 
That is correct not_near_it. If the market value drops you give the council the lot. No percentage calculation involved. You should sell the house at what you got it for. No benefit for you in trying to get a higher price. All your doing is giving the muppets in the council who implemented this system more money.
 
JBM14 said:
That is correct not_near_it. If the market value drops you give the council the lot. No percentage calculation involved. You should sell the house at what you got it for. No benefit for you in trying to get a higher price. All your doing is giving the muppets in the council who implemented this system more money.
Click to expand...

When you say the lot, do you mean €15k or the €15k plus the amount I would be left with after clearing my mortgage?
 
Whatever amount is left after you clear the mortgage i.e. 15k in this case. The 20k you have left is yours to keep. That is essentially what you have paid off your mortgage since you owned the house
 
JBM14 said:
Whatever amount is left after you clear the mortgage i.e. 35k in this case
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Seems very unfair, if for example I had nothing paid off my mortgage and still owed 265 all they would get is 15k. But as I've been careful and paid more off it they just take that money!

Where is the legislation to confirm this?
 
OK, I've been looking into this a bit more since carelessly C&Ping misinformation above (sorry about that :eek: )

The legislation is Section 9(3) of the Housing (Miscellaneous Provisions) Act 2002 and it sets out the following formula:

Y x 100 / Z

where
Y = difference between the market value of the house at the date of sale to the purchaser and the price actually paid
Z = market value of the house at the date of sale to the purchaser.

So, in your case that would be (360K - 265K) or 95K x 100 = 9,500K / 280K = 33.9%

So notionally you owe the Council 33.9% of the proceeds of sale, or 94,920.

However, this would reduce your proceeds of sale to 185080 which is less than what you actually paid for the property, which under Section 9(3)(d) cannot happen. So the amount you owe will be reduced to the amount over and above what you paid for it i.e. 15,000 plus whatever you still owe on your mortgage.

Hope I've got that correct now.
 
Brooklyn said:
OK, I've been looking into this a bit more since carelessly C&Ping misinformation above (sorry about that :eek: )

The legislation is Section 9(3) of the irishstatutebook and it sets out the following formula:

Y x 100 / Z

where
Y = difference between the market value of the house at the date of sale to the purchaser and the price actually paid
Z = market value of the house at the date of sale to the purchaser.

So, in your case that would be (360K - 265K) or 95K x 100 = 9,500K / 280K = 33.9%

So notionally you owe the Council 33.9% of the proceeds of sale, or 94,920.

However, this would reduce your proceeds of sale to 185080 which is less than what you actually paid for the property, which under Section 9(3)(d) cannot happen. So the amount you owe will be reduced to the amount over and above what you paid for it i.e. 15,000 plus whatever you still owe on your mortgage.

Hope I've got that correct now.
Click to expand...

Thanks Brooklyn :)

And if there is money left after paying the council €15k and clearing my mortgage I get to keep that right?
My solicitor is telling me I have to hand that over to the council.
 
Hiya,

I am very interested in this at the moment as I am looking at options that I have available to me. Sorry if this is an old thread but I have only come across it now.

With FINGAL it is the clawback percentage rather than the difference between what you paid and what you sell it for.

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 reduced so that it does
not reduce the proceeds of sale below the price they paid.
So they have to pay back €14,000 to the local authority when they sell in addition to any money owing on their mortgage.

this is from the fingal website where there is a pdf document "living in an affordable home and clawback". I can not post link as I have not posted enough.

So as you can see it is not as simple as deducting the amount paid away from the amount sold. It is the clawback that this effects. The clawback would change from whatever the original percentage was lets stick with the example which was 30%. The new clawback or market value discount based on above would be the discount relating to €210,000 and €196,000 which is 6.66%. So the clawback equates to 6.66% of the sale price of €210,000 which is €13,999.86 plus whatever is outstanding on the mortgage of course.

That is one way of looking at it but I am not 100% on it just throwing it out there.

It is just a pity that the example they gave also works out if you simply subtract sales price from market price!!
 
Last edited:
My solicitor has confirmed with the Council and their solicitors that it is in fact the difference between my original purchase price and the current sale price.
So I paid €265, sell for €280, owe the council €15k.
 
Thanks for the update.

Was your affordable home with Fingal?

I suppose you also fall into the "selling withing the first 10 years" which has another caveat attached.

Generally, if you sell within the first 10 years, you must pay back the
full percentage from the sale that you got as a discount when you bought
your home.

I am over the 10 years now so "should" hopefully fall into the scenario that I posted above.


 
skipper1978 said:
Thanks for the update.

Was your affordable home with Fingal?

I suppose you also fall into the "selling withing the first 10 years" which has another caveat attached.

Generally, if you sell within the first 10 years, you must pay back the
full percentage from the sale that you got as a discount when you bought
your home.

I am over the 10 years now so "should" hopefully fall into the scenario that I posted above.
Click to expand...
No it's not Fingal, are the AH rules not the same for each council though?
 
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