Paul McGrath (Westmeath, Fine Gael)
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Question 1094: To ask the Minister for the Environment, Heritage and Local Government if, in the context of the purchase of affordable houses from local authorities by qualifying individuals and the subsequent sale of those houses by those same individuals within a short period, he has satisfied himself that the clawback mechanism is fair; and if he will give examples of how this clawback is calculated. [10624/05]

Noel Ahern (Dublin North West, Fianna Fail)
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The clawback provisions provide that if a house purchased under the affordable housing schemes at a discount from market value is resold before the expiration of 20 years from the date of the purchase, the person selling the property shall pay to the local authority a percentage of the proceeds of the sale. This percentage is equal to the percentage discount allowed by the local authority on the original sale of the house where the house is resold within the first ten years. The amount payable is reduced by 10% in respect of each complete year after the tenth year during which the person who purchased the property has been in occupation as his or her normal place of residence.

For example, if an affordable house is purchased from a local authority for €120,000 and has a market value at the time of purchase of €150,000, the discount received is 20%, and this is the clawback percentage payable in the event of a resale. If the house was resold after five years for €180,000, taking account of improvements by the purchaser, the clawback payable to the local authority would be 20% of this amount, €36,000. If the house were resold after 12 years for €200,000, the clawback would amount to €32,000.

The provision for a clawback is necessary to ensure that there is no short-term profiteering on the resale of a house provided by a local authority at a discount from market value. I am satisfied that the provision works well in protecting the State's interest in these affordable houses.