Foot in the door for state tenants

Last updated 05:00 24/06/2009
HOUSE SALES: Details of the sale plan which is a main plank of National's housing policy were not signed off by the Cabinet until Monday and have not been made public until now.

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State house tenants will be able to buy their homes from September.

And all low-income first-home buyers could be in for a boost as the Government considers increasing the cap on Welcome Home mortgage guarantees by up to $70,000.

Housing Minister Phil Heatley said the state house sales scheme would be available to most tenants, with Housing New Zealand instructed to use the proceeds to build new homes where they were needed.

"We're providing an opportunity for those in a state house who've always wanted to buy their home," he said. "It's a win-win. Someone moves into home ownership, someone else moves into the replacement house off the waiting list."

Every new house would be built rather than bought "because as much as possible we want to have new builds to stimulate the economy".

He said the scheme would be available to all tenants whose homes met certain criteria, but the depressed property market meant only "hundreds, rather than thousands" were likely to buy in the medium term.

There would be no obligation on Housing NZ to sell, and not all the 69,000 state homes on the books would be up for grabs.

Exclusions would include homes on land subject to Treaty of Waitangi claims or land not owned by Housing NZ, properties not on a single title such as flats in a block or those considered strategically important.

Sales would be restricted to tenants already living in the home and would be at market rates assessed by an independent valuer. Tenants who bought their homes would be ineligible for a state house for three years.

Mr Heatley said the measures would reduce the risk of tenants buying homes and selling them off for a quick profit a major criticism of National's state house sales in the 1990s when purchases were set at 90 per cent of market rates.

He said tenants wanting to buy would have to arrange their own finance, but help could be provided through extending the Welcome Home programme. It provides government guarantees for mortgages, but is presently capped at $280,000.

Mr Heatley is considering whether to increase that to "the mid 300,000s" a move that would benefit all first-home buyers who met income tests.

Details of the sale plan which is a main plank of National's housing policy were not signed off by the Cabinet until Monday and have not been made public until now.

Mr Heatley said the 5500 tenants paying market rates were most likely to be able to service a mortgage, but only 2800 of those homes were eligible for sale once Treaty claims, strategic value and other restrictions were considered.

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Sales are to start in September, when tenants can approach Housing NZ for information and advice.

Mr Heatley said the sale-and-replace programme was in addition to plans to increase the state housing stock by 1550 by 2013. Those plans were outlined in the Budget and are being funded separately.

Labour housing spokeswoman Moana Mackey said the planned sales would create ghettos of state houses on the outskirts of towns, as that would be the only place new houses could be built with the proceeds.

"Our main concern is that we don't have any guarantees that those extra houses are going to be built in the communities where they're needed, close to where people work and where their kids go to school."

- The Dominion Post

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