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National Yawns At `Re-Announcement' Of Shared Equity Scheme

Fuseworks Media
Fuseworks Media

Wellington, May 16 NZPA - National says the Government's shared equity housing scheme has been announced several times before, while ACT has dismissed it as an election-year bribe.

This appears to be their main criticisms of a scheme that will see the Government spend $35 million on a two-year shared equity pilot to assist up to 700 households into starter homes.

Housing Minister Maryan Street made the pre-budget announcement this morning.

Ms Street said the scheme had been tightly targeted specifically to help those New Zealanders who had saved a deposit for a home, "but who cannot get on the property ladder in the area where they live and work because starter home prices have moved too far ahead of the maximum mortgage they can afford".

The pilot will run in regions with the highest house prices: Auckland, Wellington, Nelson, Christchurch and Queenstown.

Under the pilot the Government would provide an interest-free loan on a house of between 5 and 30 percent of its value, reducing the size of mortgage an eligible household had to take out.

The scheme would be limited to those with a household income of up to $85,000, who met criteria.

A minimum 5 percent deposit would be required.

House prices would be capped at $385,000 for Queenstown, Auckland $305,000, Wellington $260,000, Christchurch $255,000 and Nelson $240,000.

Ms Street said the Government was open to moving caps as prices changed but she was confident houses in those ranges were available now despite median prices being much higher.

The pilot scheme would be launched on July 1. It would be monitored and evaluated after two years.

The Government's equity share in a home would vary depending on the level of unaffordability in a region.

In Auckland the maximum the Government would put in was 30 percent of a property's value; for Wellington it was 20 percent; Nelson 10 percent; Christchurch 20 percent and Queenstown 30 percent.

The Government would not charge interest on its contribution but on sale it would get back its share with capital gain.

Any increase in value attributed to approved improvements to the home would be given to the household.

The owners would have to obtain approval from Housing New Zealand in advance of improvements they wished to make to ensure there was no later disagreement over the definition of an improvement.

Other details such as any limits on lenders and incentives to buy out the Government would be revealed when the scheme was launched.

One incentive was that if a homeowner paid off 5 percent of the Government amount they would get 1 percent free.

"They can build up to taking over the Government's share if that's what they want to do."

Ms Street said it was not clear whether there would be a "lolly scramble" or whether first home buyers might prefer to sit and see how the market settled in the next year or two.

But she said now was a good time to buy.

National housing spokesman Phil Heatley said Labour had re-announced shared equity a dozen times since 2004 and he was concerned some detail was missing, although most of his questions were answered in the minister's press pack.

ACT leader Rodney Hide said the shared equity scheme was an election-year bribe.

"This scheme is a bandaid to the problem of high interest rates, low wages and high housing costs."

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