NB:-Shocking discovery on clawback concept during sale of A/H Apartment

[elcato]

I believe anyone reading the thread will come to the same conclusion that there is no scam here.

Well apart from one person.

 

[renter45]

Ah give Zen a break, it was obviously stressful time, even if the tone/attitude was disliked by some, it opened up a healthy chat on the complications of affordable housing. Scheme is closed since 2011 (I think) so people selling AH will become more & more common. AH was a step on property ladder for 99% with majority expecting to trade up in the future.

 

[Learner2015]

I've read this thread and just wanna confirm my understanding here, the crux of the scheme was:

-buy a property at a discount of 25%
-if you sell it before 20 years has elapsed for more than the discounted price and less the market value at the time of purchase you pay all of this back to the council.
-if you sell it before 20 years has elapsed for more than the discounted price and above the market value at the time of purchase you pay the full 25% back
-any sale proceeds above the market value at the time you then pay a clawback percentage to the council and this percentage drops every year after year 10 by 10%

If my understanding is correct what was Zens problem that he had to pay a percentage of his gain via a clawback? - is that not a fair trade off for the risk the council took in the first place giving the discount?

 

[Leo]

what was Zens problem that he had to pay a percentage of his gain via a clawback?

In essence, Zen was happy for the tax-payer to subsidise 25% of the purchase price of the house. not so happy the tax-payer should be entitled to less than 12% of the sale prise.

 

[Brendan Burgess]

Ps. The money owed to the council above the original purchase price is not 'confiscated', it is 'clawed back' as per original clawback agreement. No scam here at all. It's all there in the original documents we received. What a misleading thread this has been.

This thread actually belongs in the 'letting of steam' forum. It's so inaccurate and misleading. You bought an apartment that didn't suit your long term needs. You've felt trapped and hard done by terms and conditions that we all accepted when we bought on the scheme. There has to be terms and conditions, without them the scheme is open to abuse. It seems your failure to understand clawback has been the final straw for you, but that's not the council's fault. I think this thread has actually been irresponsible in that it might cause some purchasers stress to think we've been scammed. We haven't.

Great posts Easter.

I can't recall a post from a new user getting so many likes.

Welcome to Askaboutmoney.

Brendan

 

[Easter]

Thanks Brendan. I recently reregistered. Cancelled my account years ago after the password problem. Reading this thread made me reregister.

 

[Easter]

In essence, Zen was happy for the tax-payer to subsidise 25% of the purchase price of the house.

I think it's a bit inaccurate to say the tax payer subsidised 25% of purchase price. I'm not an expert on Part V, but my understanding is developers were obliged to make a certain percentage available for affordable housing. The council didn't hand over 25% of purchase price for each affordable unit. If prices rise the council should make a profit and tax payers benefit?

I would imagine what I paid for my affordable apartment covered the cost price. Nearly 10 years on my apartment is still not worth what I paid for it. I paid €265k and apartments in the area are still only fetching €250k on open market. Private developments are going for more. I just think we need to be careful not to drum up more resentment against those who bought on the scheme. We are taxpayers too and the scheme was available to many working professionals. When properly administered, I think it's a fair scheme.

Although on paper I got approx 30% discount on my property, in reality the discount isn't that much. Developer in our case was let build the affordable units on a separate site. The build and finish were inferior to open market units. Our development isn't gated and has no underground parking or visitor parking as the original development does. Yet our market values are set against those of the privately sold units. Also factor in that there is a huge amount of social units in our development and affordable units fall further in value.

Generalisations around 'tax payers' money can be misleading. I'd love to see a full breakdown of what affordable housing has actually cost the state.

If prices rise the Council will benefit from clawback income, so that's a win surely for taxpayers?

 

[Leo]

I think it's a bit inaccurate to say the tax payer subsidised 25% of purchase price. I'm not an expert on Part V, but my understanding is developers were obliged to make a certain percentage available for affordable housing. The council didn't hand over 25% of purchase price for each affordable unit. If prices rise the council should make a profit and tax payers benefit?

Yeah, that's a fair point. So to be more accurate, it was the purchasers of the full-price units who subsidised the 20% of developments set aside for social or affordable housing.

 

[Easter]

Without seeing figures we can't say for sure how it works. I'm sure it varies. Did those units cost any more than other units where there was no affordable in the wider scheme? Or maybe affordable units actually pay for themselves? Perhaps it is only social units that are actually subsidised? There is a big distinction to be made. Maybe the hit was worth it for the developers who got planning permission on great land?

We all knowingly bought in to it anyway. Private purchasers bought knowing there was part v properties included - they didn't have to. I bought knowing there'd be social units in our development. I also bought knowing I'd be forever looked down on by those who think their tax payers money paid for my home. My money did! I doubt my place cost more than the 265k I paid for it. I really would love to see actual figures.

 

[Firefly]

From reading this thread it seems there is an opportunity for someone who bought an AH house to sell it for its purchase price to someone they know who could then flip it for a handy profit with the CC losing out on any gain...Does the CC have any say in the selling price as they surely have the most to gain/lose out?

 

[Easter]

There are other threads here where people have talked about valuations from the council in advance of selling them. As an owner I'd be worried about inflated valuations by the Council if anything. We were certainly over valued at point of purchase.

I would imagine though that now, with the existence of the property price register, neither party could exploit the situation.

 

[renter45]

From reading this thread it seems there is an opportunity for someone who bought an AH house to sell it for its purchase price to someone they know who could then flip it for a handy profit with the CC losing out on any gain...Does the CC have any say in the selling price as they surely have the most to gain/lose out?

The county council have to approve the sale price, with the property price register its a lot easier to track the sale value of houses so I can't see the cc letting it go too cheaply.
Surely after 10 years the AH have to be in positive equity (Dublin ones anyway)
- circa 30% discount - anyone buying post 2007 may have benefitted further from the market falling.
- 10 years of paying mortgage
- market value increasing slightly since 2012/13

And the clawback starts reducing year 11 onwards
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Yr10 Yr11 Yr12 Yr13 Yr14 Yr15 Yr16 Yr17 Yr18 Yr19 Yr 20

Sales after yr 20 mean no clawback to council & full profit to homeowner (less taxes etc...)