To sign contract for Affordable offer?

Hi guys. I’ve been a little stressed to put it mildly as to whether or not to go through the final stages of buying a two bed apartment offered through Affordable. I’ve been reading posts here for a while and agree you would have to be crazy to buy on the open market with a strong possibility that prices will drop another 30% over the next few years.

The fact that it is an affordable offer protects me from negative equity though and if worse case scenario prices do fall to that extent all that happens is that I break even and get back what I put into it as the discount on this offer is 25%

The apartment

Higher end 2 bed valued at 320k, offered at 240k - really love the apt, a better quality to anything I’ve seen through Affordable before.

Price includes underground carpark / 24 hour security

Location - suits me perfectly - 15 mins drive from town

Management Fee - €1,400 pa (€117 on top of monthly repayments)

Me

Very secure reasonably well paid job (45k)
Job cannot be affected by the downturn
Have no intention of selling for the foreseeable - would live there for at least 7 years

Mortgage

Have loan approval - repayments 32% of my monthly net salary
Fixed interest rate 5.3% for the next two years
Repayments over 40 years though - will aim to clear more than the minimum
Can rent a room if circumstances change - (the area can expect up to €600)

Ok they’re the facts and ordinarily I would say it’s a really good deal. I am however worried that in my naivety I’ve missed something. Is this a really bad idea? The forecasts for the economy are quite scary. I guess I’m wondering if anyone could predict how I might potentially be effected should the current forecasts come to pass.

I’ve been waiting for almost two years - don’t want to follow my heart and make a really stupid decision

FFS, thge bubble has just burst. Time is on your side and your not under any real pressure so save cash & RENT. There is fuck all chance of Prices going up over the next couple of years. The money you will save and fall in prices will put you in a far better position to buy an even nicer “House” and having to borrow less… Let the greedy Neo Landlords take the hit.

Is the full quoted price on the property in line with non affordable properties.

I’ve had a look at an affordable apartment in Santry and I thought the developers who were trying to sell it had a nerve to look for what they were asking. The affordable price was €260k with clawback of €100k. Now 2 months later there are properties in the same parkland with similar spec selling on the open market for €300k.

So my only concern is that you could be subject to some extra NE which has arisen from the overvalued price including clawback which you will be faced with when you go to sell at a future market value.

I would like to add that the AH that I was offered wasn’t through any local authority list I signed up for. It was an EA chasing after me. They were desperate to offload this AH apartment on me so don’t think the opertunity won’t come around again.

The AH apartment was Carrington in Santry

Link

Higher end 2 bed valued at 320k, offered at 240k - really love the apt, a better quality to anything I’ve seen through Affordable before.

I had an offer like that for Academy Square in Navan for a 2 bed a few months ago and a 2nd one in this Bailis Village Ghost Estate in Johnstown

The market value was set too high same apartments now on offer for 220k-250k. Your offer sounds like Academy Square. Seems to me they want to sell more and more stock per “affordable housing”. Furthermore the price falls for apartments will be the biggest.

would live there for at least 7 years >>> You know you will only be ably to sell after 20 years without penalty and as fas as I know be allowed to rent out after 10 year

repayments 32% of my monthly net salary >>> it is much but you could do it
Fixed interest rate 5.3% for the next two years >>> that is far too short inflation is through the roof the bank offer savings accounts with 7 or 8% that means they expect interest rates to be rising soon (within the next two years?!) so I think it is almost criminal to get the interest rate only fixed for 2 years - When you still want to do it only go for fixed 10 or 15 years interest rate otherwise don`t do it. Othwise the percentage of your income you are spending on the mortgage would be rising to 50 or 60%.

Believe me it is a bad deal!

“I’ve been waiting for almost two years - don’t want to follow my heart and make a really stupid decision” >>> We only had to wait for 4 months and that should tell you everything ok maybe we were better off applying as a couple.

DON`T DO IT! Wait for at least another year and see what happens next. US and UK are already down and the Irish property market has additional risk due to careless banks and lenders

Better plan is save some money know as the banks will become very strict with new mortgages for a while. When you have saved 10-20% of the value look for a place that suits you and then go for it. I think your best time to buy will be in 2-3 years. And don`t forget to check for long-term fixed terms.

The Coast development in Baldoyle has already seen it’s market price fall in line with the discounted Affordable housing price.

AH is a scam, don’t touch it, you’re getting a discount on a developers bloated valuation.

I had a serious look at AH and it is a complete load of bollox. A discount off an inflated price.

Agreed, and AH is also a bail-out via the back door.

Affordable Housing is a taxpayer sponsored bailout for greedy developers.

They can’t sell their shitty shoeboxes on the open market, so the taxpayer picks up the tab at “makey uppey” prices that the market WILL NOT PAY.

Don’t fall for it. It’s a scam to keep prices artificially high, nothing more.

SNAP!

Fix the link like above, please

Besides the above points - all extremely valid. Are you single? Do you plan to have children in the next few years? IF so, would you be happy having a 2 or 3 year old living there with access to balconies/stair wells etc. Is the place buggy friendly etc? Most of the young people I am dealing with either bought 2 bed townhouses or apartments and the apartments all have similar problems. For the most part they are just not suitable for families. Great when you a re single or shacked up with the bird but things change in a big way once the nippers arrive. I would stay away from it, rent for another year or two then get a three bed house for not far off the same price (plus you should have saved up a bit more personal equity).
On a separate note, find out what the break down between social and affordable housing is and whether the social tenants are vetted or not. Not very PC but very important to know who your neighbours are especially when you are forking out a lot of money. Also, check with the local Gardai to see have there been any problems at the development from dodgy tenants etc. Sometimes you can be amazed what you can find out (drug dealing, vandalsim, burglary, car theft, social disorder etc).

I wouldn’t rely on the €1400 figure for management charges. Don’t be surprised if it ends up higher.

Are you aware that currently there’s no mechanism to remortgage the property without paying the clawback?

Have you cleared it with the local authority about renting a room? I’ve heard conflicting reports about whether this was allowed.

Lastly, do you see yourself living there for 10+ years?

"The fact that it is an affordable offer protects me from negative equity "

Is this fact?
Somebody explain this once and for all?
Because whatever about the drawbacks if this was true surely its a runner.

Valuation from bank came back as 320k a week or two ago (I know that’s current value, and asking price but not necessarily what they’re selling for) Cannot see why a bank would overvalue in the current climate and when I’m only looking to borrow 225k

All apartments in the current phase are sold

On the extra NE point - I have to go through this with the solicitor - there are a few gray areas that nobody seems able to answer

Hi Holla - no apartment is in Dublin. Only a small percentage of the properties were affordable as far as I know

I know the whole clawback thing is a major pain but all I’m repaying is the amount I initially saved, so my own money is fairly safe. To my knowledge clawback is based on market value on SELLING aswell - want to get this confirmed by solicitor

I find with renting it’s impossible to save. Managed to save a deposit of 20k through SSIA, so by my logic the discount on the property and not paying rent more than cover any potential savings through decreased prices over the next few years…could be wrong though

Can’t see myself being able to afford a decent house on my own for a long time without having to rent half of it out

  • One less potentially bankrupt developer for them to worry about.

  • Reduce the bloated housing inventory (which the banks have financed the construction of)

  • Developer gets “makey uppey” price

  • Bank gets their pound of flesh from the developer

  • Purchaser is not stretched financially to repay the mortgage and subject to clawback so therefore extremely unlikely to default

What’s not to like about that if you’re a bank? Sounds like a scheme hatched in banking heaven to me.

Some very valid points here thanks, Yes I’m single and can’t get my head around the possibility of kids for a while yet. But could be a big problem

A 2 bed for 320k is hugely over valued, even now you could get a 2 bed on the open market for less.

With-in 1-2 years a 2 bed will be less than the discounted AH price, it’s already happening in some areas.

You’re a fool if you take this, the claw-back is for 20 years and it’s less than clear what happens if you go into NE, I doubt the CC are going to pick up the tab for that.

Will you really want to live there for twenty years?? If you sell before that at the very best you’ll break even.

This is a no brainer.

This is a fact, house prices are falling. Apartments will be hit the hardest.

How do you get out of the bed in the morning?? Only joking…you obviously know a whole lot more about the inner workings of the property industry than I do. I’ll be arranging an independent valuation as well. Although is there any point to this?

With great difficulty :stuck_out_tongue: