QUESTIONS AND ANSWERS
What do the results of the recent research tell us about the impact the Housing Foundation’s ‘placemaking’ housing development approach has on family wellbeing?
- More than 80% of residents rated their quality of life as extremely good or good in their present home, compared with just 46% in their previous home.
- Residents said their health had improved in their new homes. The majority (64%) rated their health as excellent or very good. Only 19% felt this to be true in their previous home.
- 81% said their new, well insulated, dry homes have helped prevent winter and respiratory illnesses
- The location of the development, with nearby access to walkways and cycle ways, has increased residents’ opportunities to exercise, thereby improving overall health
- Improved health has resulted in a reduction in absenteeism for families with school aged children and less demand for healthcare services. This, in turn, helps parents feel more positive about their children’s achievement at school.
- Since moving in to the development, people’s lives have become less transient and people feel more secure.
How does the Foundation’s “shared equity” scheme work?
Under the “affordable equity” model a household purchases a share of the home to a level they can afford (subject to certain conditions). They must have a deposit of $10,000 or more to be considered for an Affordable Equity programme. The remainder is owned by the Housing Foundation and both parties are represented on the property title. The household organises their own mortgage with the advantage, under this arrangement, that they have a mortgage they can afford but which enables them to purchase a significant equity share in the property on the open market.
See the example figures below for a typical 75% ownership share:
Purchase price of property at market value $400,000
Household buys their home with a mortgage plus their deposit $300,000 (75% of value)
Foundation contribution $100,000 (25% 0f value)
The Housing Foundation retains 25% passive ownership of the house. The Foundation’s ownership is the difference between the value of the home and the amount the household (shared owner) can afford. The householder’s funds come from their deposit saved and the mortgage amount borrowed from the bank. In the above example, the Foundation’s 25% ownership amount is $100,000.
How does the Reserve Bank’s minimum 20% mandatory deposit affect this?
The Reserve Bank Loan to Value Ratio does not apply to new houses.
What happens if a prospective home owner does not have savings for a deposit or is unable to obtain a mortgage?
Then our “rent to buy” scheme might be more appropriate for them. This is where people rent initially and then use part of the increased value of the house after five years towards a deposit to purchase the home.
Are banks lined up with special loan packages and who guarantees the loan?
The bank negotiates directly with the household regarding the mortgage package. The Housing Foundation recommends a 25 year principle and interest mortgage repayment structure and is kept informed by the bank and household on the terms of the mortgage application. The loan is guaranteed by the household, the borrower, and is secured against the house. The Housing Foundation does not guarantee the loan.
How do you define a low income household?
Most households are working families on low incomes when they apply to the Housing Foundation. They are working households who can afford, with a mortgage and some assistance, to purchase a share in a new house. Household income is determined by the household size and makeup and circumstances such as debts, level of financial literacy etc. Generally gross-household income level is capped at $90,000, though this depends on the household size and its makeup.
How are people eligible for assistance from the Foundation?
At least one member of the household must be a New Zealand resident or citizen and at least one member of the household must be an income earner. This must be their first home i.e. they cannot be a current home owner. They must be committed to owning their own home and aware that they won’t be able to afford to buy without some assistance. They must also be capable. With some assistance and support of obtaining a mortgage from one of the New Zealand banks which partners with the Housing Foundation and these products
How does the Tindall Foundation support the Housing Foundation?
The Housing Foundation was formed 11 years ago, with support from the Tindall Foundation who wanted to find ways to assist with affordable housing for New Zealand families in a way that built communities. The Housing Foundation grew into a new area of philanthropy for the Tindall Foundation with both social and business objectives – a true ‘Social Enterprise’. The Housing Foundation has received a combination of donations and loans from the Tindall Foundation, with a total loan facility which currently sits at approximately $4.3 million.
Can anyone purchase the homes for sale on the open market at Waimahia Inlet and who are they able to on sell to?
We have a significant number of Waimahia Inlet homes available to purchasers who intend to live in the home themselves i.e. as an owner occupier. When the time comes to sell and move on, there will be no covenants to restrict owners’ ability to sell in the open market.
How can you guarantee the quality of the Waimahia homes you are offering?
Each home has been architecturally designed to be warm and energy efficient, and is built by experienced and registered builders who we have 100% confidence in, to an excellent standard.
What kind of price range will the Waimahia homes be selling for?
The properties will have values of $325,000 to around $500,000 offering unparalleled value for money for living in a coastal environment with water views.
What role does the Housing Foundation play as shared owner?
A passive role. We do not charge any interest or rent to the householder for our share of the dwelling. When the property is sold, both the householder and the Foundation get their share of any increase in the value of the property.
How often can households increase their share in a house?
On the anniversary of a purchase date they may make an application to us, to increase their share, in 5% blocks, up to a maximum of 85%. At this point their next share purchase must be the full purchase of the remaining 15% of the equity owned by the Housing Foundation. The property is revalued each time a home owner wishes to increase their equity to determine the cost of an increased share.
Is there a Body Corporate fee in each development area?
No, but at Waimahia Inlet there will be a Residents’ Association. By purchasing in the development, residents agree when they purchase their house or a share in the house to become members of the Association and follow the Association guidelines for community living. There will be a yearly fee to belong to the to the Residents’ Association.
Are there covenants on the homes? i.e. modifications; maintenance; quantity of tenants
There will be covenants requiring households and property owners to keep their home, their gardens where they face the road, the shared access ways and facilities, maintained to a minimum agreed standard.
Who pays all the ‘outgoings’ for each property and are these proportional?
Affordable equity households are responsible for all outgoings, including Council rates, house insurances and all service costs.
How do people apply for Affordable Equity and Affordable Rental products?
They can go to the Foundation’s website and complete the ‘Expression of interest’ which is the start of the application process. They can also phone the 0800 446 874 and speak to a housing advisor who will guide them through the process.