Print this PageClawback
If the purchaser sells their affordable home within 20 years, they must pay back a percentage of the sale price to the local authority. This is known as the ‘clawback’ and it is in place to prevent inappropriate profits arising from the sale of an affordable home.
The amount to be paid will depend on when the person sells the affordable home (within 20 years) and how much discount they received on the original purchase price from your local authority.
For example:
- If they sell within the first 10 years, they must pay back the full percentage from the sale that they got as a discount when they bought their home.
- After 10 years, the percentage they must pay back reduces by one-tenth for each full year they live in their home.
- If they sell their home after 20 years, they do not have to pay any ‘clawback’ to the local authority.
In calculating the amount payable due under the clawback, allowance is made for any material improvements made by the customer.
Material improvements are improvements made to the property (whether for the purpose of extending, enlarging, repairing or converting the property), but does not include decoration, or any improvements carried out on the land.
Clawback Calculation
The following formula sets out the calculation of the clawback where an affordable home is sold with the 20 year period:
Y x 100
Z
'Y' is the difference between the market value of the property at the time of the purchase and the price actually paid, and 'Z' is the market value of the property at the time of the original purchase.
Example of calculation:
If the market value of the property is €260,000 and the price paid by the purchaser is €190,000 then the clawback percentage is calculated as follows:
€260,000 - €190,000 x 100 = 27%
€260,000
