Selling an affordable house

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I've been offered a new job recently, down the country.

I bought a 2 bed mid-terrace affordable house in November 2007 for €198k.

There's 3 bed semi-d's available on the open market in the place I'm moving to for €200k.

The market value of the house when I bought it was €315k, clawback 31%.

The current value is about €240k. If I sold it for €240k, I'd have to pay the Council €240k minus €198k...€42k.

Whats to stop me putting this on the market at €220k and getting a quick sale, and only paying the Council €22k...on hte face of it I'd be at no loss, I still get my €198k back, am I missing out on something?
 
You'd have to ring the council to get the exact procedure from them.
In theory you can sell it for less, but I imagine they will insist on a reasonable value.

Have you read the thread here on the land registry problems when selling an affordable home? Might be of interest, you may not be able to sell as quickly as you want to.
 
I am curretntly trying to get out of the clawback. I do not know does any of this help

The local authority works out the clawback as follows:


  • When you buy your affordable home, you get it at a discount to other similar properties in the market. The clawback is based on the percentage discount you get when you buy you affordable home. If you decide to sell or remortgage your home, the local authority applies this percentage to the price you get for the sale.
  • 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.
  • After 10 years, the percentage you must pay back reduces by one-tenth for each year you live in your home.
  • If you sell your home after 20 years, you do not have to pay any ‘clawback’ to the local authority.

EXAMPLE:

John and Mary buy an affordable home. The market value of this property is €280,000 and they buy it at an affordable price of €196,000. So, the market value discount to John and Mary, which is known as the clawback, is 30%.


  • If John and Mary sold their affordable home for €330,000 after five years, the clawback would be €99,000 (30% of €330,000). They would also have to repay any money owed to the mortgage lender to clear their mortgage.
  • If John and Mary sold their affordable home for €430,000 after 15 years, the clawback would have reduced by 15% and they would have to pay back €64,500 (15% of €430,000) to the local authority. They also would have to repay any money owed to the mortgage lender to clear their mortgage.
  • If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback, but they would have to repay any money owed to the mortgage lender to clear their mortgage.
  • If John and Mary sell their home and the market value has decreased from €280,000 to €260,000 then the clawback would be based on the lower market value of €260,000 less what they paid €196,000 which is €64,000. so they have to pay back €64,000 to the local authority when they sell in addition to any money owing on their mortgage.
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Now, from my point of view, we bought for about €233k 2 years ago. the market value was €375k. Apparently same home s market value today is approx €235kish. I have heard, but am trying to get clarification from my local council, that if this is in fact the case, can we get out of the clawback for nothing? Seems logical that the answer to this is yes.
 
In theory yes, but in practice it could be another story. I put all this to my council and got a one line answer after four weeks. It was of no benefit whatsoever.
 
I'm in the process of buying the council out at the moment. Everything was going grand and got mortgage approval based on the figures I gave. In the meantime I was waiting on an exact redemption figure from the council.

I'd been waiting a while and decided to contact them to know what the hold up was. It seems the council are disputing the current value of the property!!! 2 estate agents in our local area valued the property at 200k, but, the council are saying 250k. Don't know where they got 250k from as there are 3 bed houses going for 220k around the corner.

To be honest, I do not think much of the councils valuers as they initially valued our property at 325k when we got it. At the time we were naive and didn't bother checking it out. If we had of done this, we would have quickly realised that their valuation (and therefore clawback) was hughly inflated and unrealistic for the property in question. We also didn't know that we could appeal at the time.

So now we're stuck in limbo and I'm waiting for the council to get back to me with a figure so I can push ahead and get rid of this shower of brain dead idiots.
 
I always wondered how you come to the figure that is the market value when you ome to buying the council out.

My council actually told me they won't let me buy them out. As previously posted I want to move elsewhere, so if they won't let me buy them out my only option is to sell and to get back what I paid, effectively a loss after doing up the place. I'll be surprised if I get a buyer for what I paid for it....yet this buyer can pay the price for it but I can't.

New legislation promised, in the next few months, but I'm not sure whether it'll happen this side of September.
 
Basically I decided I wanted to buy them out and got the property valued by 2 estate agents. They both came in at 200k.

In order to get proof of the property value you must pay the estate agent a fee for letter which you will then send to the council to request a redemtion figure.

In our case we bargained the agent down to €100 for the letter which we then send to the council.
 
Any progress with the council Nathan? Did they ask you to get it valued yourself first and then their valuer disputed the figures?

Thanks,
Vicks.
 
Hi Vicks,

No progress yet. Basically when I called to query a redemption figure they explained that I needed to send in a valuation. Now the valuer in DCC is saying they never consider this figure. So basically I wasted €120 for a worthless letter.

She wouldn't give me any specific figure or information over the phone until I receive the official letter with the redemption figure, in the mail.

The only reason I know they are disputing the €200k, and stating €250k, is because the guy in the accounts department let it slip on the phone!

:(
 
Ok. Here's the update:

DCC sent us the redemption figure stating that they have valued the property at €240k and calculated the redemption figure at approx. €239k.

I called to ask what the process is for disputing this figure and they didn't have an answer, stating that it a new rule that their own valuers value the property. I asked 1) how this was possible since they didn't view the property and have no knowledge of the going issues in the development, which has driven the price down.
2) How can they explain the fact that 2 local estate agents valued the property at €200k. How can they explain the €40k differential?

This is crazy, obviously their valuers have a vested interest to value to propery at the higher end to get a bigger clawback. I asked could we get an independent, unbiased valuer who knows the area, to which she said 'no'. Eventually we got to the point where it was like talking to a bring wall because they have no answers and basically I'm to accept the redemption figure.
I am thinking of getting a solicitor onto the case. Can anyone offer any advice?
Thanks,
 
Hi Nathan, I think I would get a solicitor. I would have a major issue with their valuation if they did not even look at your property.

Vicks
 
Hi Everyone,

I work for one of the councils in the housing dept hopes this info helps.

The clause in the affordable housing prevents people who bought ah homes from going into negitave equity, meaning you can sell your ah and the council takes the hit on the clawback. When the clawback % and the mortgage closing figure is more than the sales price (meaning you would owe more than you are selling for) they change the clawback formula from the % of the sale price to sale price minus the price the council sold it to you for.

when you try and sell/remortgage the council will should send out a valuer to the property to view inside and out. On a remortgage they will send the valuer within 2 weeks to get the market value from which they will work out the clawback.

On a sale they will wait until the ah goes sale agreed and they will send out a valuer to deem the sale price is "fair and reasonable"

I have seem valuations successfully chalanged by the owner with other valuations from reputable estate agents the decision to change it is completly with the County Valuer and not the mortgage/housing depts of the councils.

Some councils do have different procedures as mine do as the affordable housing scheme is not at all equiped to deal with the massive downturn in the market and each has to get legal advice from its own legal dept on everything which can take a serious amount of time and can be completly different depending on the legal dept.

There is the affordable homes partnership who are suppost to be there to give advice to the councils but they are very relucant and slow and mostly just tell you to talk to ur own law dept.

My advice to you if you are thinking of buying out the clawback is do it now if this is the bottom of the market its the best time by far, could save you 10's of thousands.
 
If your apt goes into negative equity then you dont have to pay the council back any clawback as they dont want you getting into debt.
 
Hi,

In my case the council are essentially disputing the fact that my property is negative equity, so they can get the clawback.

They have a way around everything and how convenient that they value the property themselves. How can this be allowed considering their vested interest in over-valuing in order to get a clawback.

Hopefully we'll hear back soon from our solicitor.
 
FWIW, if the Housing Misc Provisions Bill ever gets through the Oireachtas it will allow for a fairer valuation procedure.
 
Brooklyn said:
FWIW, if the Housing Misc Provisions Bill ever gets through the Oireachtas it will allow for a fairer valuation procedure.
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Is there a draft of this yet? How will it effect people who want to remortgage and pay clawback (or clawback reduced to 0% if in negative equity).

I know originally people campaigned to be allowed to remortgage without the clawback kicking in.
 
Cheeus said:
Is there a draft of this yet?
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It's already going through the Dáil.

How will it effect people who want to remortgage and pay clawback (or clawback reduced to 0% if in negative equity).

I know originally people campaigned to be allowed to remortgage without the clawback kicking in.
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The law will allow you to remortgage without the clawback kicking in. I don't really understand why you need a law to remortgage AND pay back the clawback. If you want to pay back the clawback so that you can do X Y or Z, I would assume you could just go ahead and do X Y or Z and then when the council comes looking for you to pay back the clawback because you have done X Y or Z, you just pay it. Right?
 
does anyone know if the councils take in to consideration any money you have spent on the property when they calcualate the clawback? For example, if you spend money on floors, kitchens, etc do they allow you anything on this when you sell? J
 
Hi Cheeus,

know it was an old post (04/09) but you mentioned land registry issues re selling AH. Cannot find post? Please advise as thinking of trying to sell mine or swap?
 
Forgot to post this before Christmas:

Question No. 214
To the Minister for the Environment, Community and Local Government:

To ask the Minister for the Environment, Community and Local Government if he will review Section 99 of the Planning and Development Act 2000 and Section 10 of the Housing (Miscellaneous Provisions) Act 2002 pertaining to the clawback provision for affordable housing in view of the property crisis and the effects of the provision on those who bought affordable homes between the years 2004 and 2008..
- Alex White.​

For WRITTEN answer on Thursday, 15th December, 2011.

Ref No: 40485/11
REPLY​

 Minister for the Environment, Community and Local Government (Mr. P. Hogan)

As announced in the Government’s Housing Policy Statement published on 16 June 2011, all affordable housing schemes, including shared ownership, have been stood down in the context of a full review of Part V of the Planning and Development Act 2000. The review will commence in early 2012 and will encompass the issues raised.

 
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