Ballot decides home owners

Press, 7 December 1985, Page 9

Ballot decides home owners

SARAH SANDS,

By

property reporter

Forty-six applicants watched anxiously yesterday as the Minister of Housing, Mr Goff, drew the marbles in the ballot for the first 30 houses in the Government’s new Housing Corporation lending scheme. Known as equity sharing, the scheme is to help modest-income families, who do not qualify for corporation loans, to buy their own homes.

Only 15 applications had been received for the 30 houses by last Friday but by Tuesday this week, the closing date, 46 applications had been received.

It was decided that the fairest way of allocating the houses was by ballot. Christchurch is the first

area to have the scheme, which will help 500 families in New Zealand to buy their own homes during the next year. Mr Goff said the houses offered were all good quality and built of permanent, low maintenance materials. The prices range from $58,000 to $67,000 each. One of the most important aspects of equity sharing was that the successful applicants would-be “standing on their own feet.” "This does not involve any handout or subsidy on the part of the taxpayer.” Under the scheme, the borrower pays a 10 per cent deposit and the loan advanced will be a single mortgage. Repayment will not exceed 25 per cent of the household’s gross weekly income. The interest rate is 3 per cent as well as the

inflation rate at the time.

“By indexing the interest rate to inflation, the taxpayer’s investment in the loan is protected in real terms,” said Mr Goff. Mr Goff said that equity sharing had several advantages for the borrower, including comparable interest rates to private sector first

mortgages and a mortgage of up to 90 per cent of the value of the home, which meant that no second mortgage was needed.

“Repayments will often be lower than rent charged in the private sector,” he said.

For some people on a low income, it was conceivable

that the loan may never be paid off, he said. “In this case, equity sharing would in effect be a long term lease rather than involving the accruement of a capital gain with inflation over time.”

A further 16 houses in Christchurch will be available for purchase under this scheme early next year.