Affordable housing purchase schemes were operational between 1999 and 2012. This scheme is now discontinued however if you were one of the affordable home buyers in the last number of years, the following information may still be relevant for you.
Affordable homes were provided for people who could not afford to buy a home on the open market. They were provided at a discount to the market price on the condition that you had to live in it.
If you sold it within 20 years, you had to pay back a percentage of the sale price to the local authority. This is known as a 'Clawback'.
Selling your Affordable Home
If you sell your affordable home within 20 years of buying it, you must pay back to the local authority an amount known as the ‘clawback’. This applies whether you have a local authority mortgage or a mortgage with a bank or building society.
How Does the Local Authority Calculate the Clawback?
When you bought your affordable home, you got it at a discount to other similar properties on the market. The clawback is based on the percentage discount you got when you bought your affordable home. If you decide to sell your home, the local authority applies this percentage to the price you get for the sale, depending on the current value of the property. Examples of different scenarios are set out below.
The amount you repay is calculated based on:
- The clawback or percentage discount
- The resale price
- The number of years you have lived in your affordable home
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.
If you sell within the second 10 years, between years 11 to 20, the percentage you must pay back reduces by one-tenth for each full 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 of How the Clawback Works
John and Mary bought an affordable home. The market value of this property was €280,000, and they bought it at an affordable price of €196,000. So, the market value discount to John and Mary, or clawback, was 30%.
Scenario 1: if they sell their home after 20 years
If John and Mary sold their affordable home after 20 years, they would not have to pay any clawback to the local authority as the clawback charge expires after 20 years.
Scenario 2: if they sell their home for less than the affordable price
If the market value of the home decreases below the affordable price John and Mary paid for the home, and the home is sold at this lower price, then no clawback is payable to the local authority.
Scenario 3 - if they sell the their home for less than the original market price
If John and Mary sell their home and the market value has decreased from €280,000 to €210,000 then the clawback would be based on the lower market value of €210,000
Scenario 4 – if they sell their home for more than the original market price:
If John and Mary sell their home for a higher amount than the original market value for example, €330,000, then the clawback would be based on the higher market value of €330,000
For further information, you can contact your local authority.