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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.
FWIW, if the Housing Misc Provisions Bill ever gets through the Oireachtas it will allow for a fairer valuation procedure.
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.
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