Renting out an affordable home

deadlybuzz123

New Member
Messages
3
Hi,

I currently live in an affordable home bought back in 2006. For anyone not familiar with the affordable housing scheme here is a brief description. (The scheme was ended back in 2011).

"The affordable housing schemes aimed to help lower-income households to buy their own homes. They offered eligible first-time purchasers the chance to buy newly constructed homes and apartments at prices significantly less than their market value.

If you sell your house within 20 years, you will have to pay the local authority a percentage of the proceeds of the sale - known as clawback. This percentage is expressed as the percentage difference between the sale price and the market value of the house. This amount will be reduced by 10% each year after you have owned your home for 10 years. So, if you sell your home after 20 years, you will not have to pay any clawback to the local authority."

I'm considering buying a new house in the near future but would like to keep my affordable home and rent it out. My understanding is there are some rules in place that do not allow affordable homes to be rented out. Is there anyone on here that knows anything about this and the risks involved if I was to rent it out? If I do rent it I plan on registering as a landlord and paying tax on the rental income.

The main reason I want to keep it and rent it out is to have somewhere for my daughter to live when she's a bit older. I'm worried she won't be able to buy a place of her own given the way the housing market is going.

Any advice is much appreciated.

Thanks
 

Palerider

Frequent Poster
Messages
1,406
The scheme was designed to assist people like yourself, you met the criteria at that point, I would say that the scheme was never intended to provide a rental income, at least not for the twenty years as you outline.

How long are you into the scheme and if within the 20 years are you going to speak with the local authority or not disclose your plans.
 

Royal Blue

New Member
Messages
2
The scheme was designed to assist people like yourself, you met the criteria at that point, I would say that the scheme was never intended to provide a rental income, at least not for the twenty years as you outline.

How long are you into the scheme and if within the 20 years are you going to speak with the local authority or not disclose your plans.
Different Councils may have different views on allowing Affordable properties be rented out. Some Councils might even be interested in renting the property from you. You may not be covered under the MPI scheme if property is rented. If you rent, there will be a penalty if you sell before 2026 as you will not benefit from clawback reduction for years when property is rented. Speak to your Council.
 

deadlybuzz123

New Member
Messages
3
The scheme was designed to assist people like yourself, you met the criteria at that point, I would say that the scheme was never intended to provide a rental income, at least not for the twenty years as you outline.

How long are you into the scheme and if within the 20 years are you going to speak with the local authority or not disclose your plans.
I bought in 2006 so I'm three years into the clawback and likely won't be in a position to buy for another year. I wasn't planning on speaking to the local authority. I was advised to say nothing by someone I know who has been renting their a/h for years without any issues.
 

Luternau

Frequent Poster
Messages
893
I wasn't planning on speaking to the local authority. I was advised to say nothing by someone I know who has been renting their a/h for years without any issues.
In short, and to answer your original question, it's a very risky strategy.

You are asking if it's ok to break the rules of the Affordable Housing scheme and profit from tax payers who have subsidised your purchase ?

That would be a no from me and I would reckon a lot of other posters here.

Would you be planning on declaring this income to the Revenue?
 

Tebbit

Frequent Poster
Messages
111
I don't know much about AH but what youre suggesting to do seems wrong to me. You fulfilled the criteria for this house at the time you bought it and so deserved to get it. Your neighbours at the time would have paid full price. Someone paid the extra for your house - the council the state - whoever. Now your circumstances have changed and you can afford to buy elsewhere good for you. Surely you should contact the cc and see what their rules regarding this are - I personally doubt it's allowed to rent it out. You should be thankful for what you got when you needed it and abide by the rules.
 

Royal Blue

New Member
Messages
2
Just a point of information to OP, you are 13 years into clawback period.
It is perfectly reasonable to seek to rent AH where circumstances change e.g. property is no longer suitable for purchaser, bigger family, moving due to work requirements etc.
 

Easter

Registered User
Messages
42
DLR council stated at time of AH purchase that clawback would be extended by a year for every year the property is rented out.

If the scheme worked the way it should, you’d sell, the council would get the clawback due to them if you’re selling at a profit. You’d get 30% of profit for the 3 years above 10 years that you lived there. The remainder goes into public funds for affordable housing. If your daughter, or anyone else, needs and qualifies for affordable housing down the road, the funds are there to provide it.

You’d be abusing the scheme by renting it out. Sell and let funds help other people on the housing list. It seems beyond fair that you can keep 30% of any profit. The council and others on waiting lists should see the benefit too.
 

LS400

Frequent Poster
Messages
508
Im sure others are in the same position as the OP, and its a fair question. You needed help years ago, as life was difficult enough to warrant state help, things have improved nowadays, and happily so, you want to limit your Daughter going through the same episode you did.

I also wonder how my kids, Nephews and Nieces will also be able afford to buy in the years to come.

If I were in the OPs shoes, I too would look to seek the possibilities of doing the same for my own daughter, most would do the same, so dont throw the moralistic card about, this Country abandoned same decades ago, and as we have seen lately, we still haven't found it.
 

deadlybuzz123

New Member
Messages
3
Im sure others are in the same position as the OP, and its a fair question. You needed help years ago, as life was difficult enough to warrant state help, things have improved nowadays, and happily so, you want to limit your Daughter going through the same episode you did.

I also wonder how my kids, Nephews and Nieces will also be able afford to buy in the years to come.

If I were in the OPs shoes, I too would look to seek the possibilities of doing the same for my own daughter, most would do the same, so dont throw the moralistic card about, this Country abandoned same decades ago, and as we have seen lately, we still haven't found it.
Thank you

Given the opportunity, I believe most people in my position would consider doing what I'm doing. I might add, the rental income is double the mortgage payments so it washes itself after paying tax etc.
 
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