Print this PageClawback in a Depreciating Market
On the sale of an affordable home, in a depreciating market, the clawback payable to the local authority is based on the Housing Miscellaneous Provisions Act 2002, section 9, sub section 3 (d) and the Planning and Development Act 2000, section 99, sub section 3 (c).
“Where the amount payable would reduce the proceeds of the sale (disregarding solicitor and estate agent’s costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result”.
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% or €84,000.
If John and Mary sell their home after 5 years 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. However, if the market value falls below what they have paid, €196,000, then the clawback no longer applies.
