Launch of new Goodstart home loan scheme aimed at Homeswest tenants

12/8/97

Thousands of low-income earners in public housing will have the chance to escape the rental treadmill and become home owners under an innovative new housing loan scheme launched today.

Housing Minister Dr Kim Hames said the new GoodStart home loan scheme was aimed at Homeswest tenants and those currently on the Homeswest waiting list.

The scheme will enable them to buy a Homeswest house or unit.

"GoodStart is a pioneering effort to turn our public housing resources around and make them work harder for the benefit of Western Australian families," Dr Hames said.

"It underlines the Government's commitment to extend the possibility of owning their home to as many Western Australians as possible.

"GoodStart follows hard on the heels of the Homeswest budget for 1997-98 of $540 million towards housing construction and spot purchases, as well as home loan programs."

Dr Hames said the scheme offered a shared equity loan with generous conditions to make the transition from renting to buying as simple as possible.

Homeswest would take up to 50 per cent equity in the home and would hold its share 'rent free' to the purchaser who might buy this share at a later date.

Many Homeswest tenants would be able to move from renting their Homeswest home to buying it at little more than current rental payments.

"We have designed the scheme so those on low incomes, even those on fixed statutory incomes such as Social Security allowances, can qualify to buy a home," Dr Hames said.

The average price of Homeswest properties is $75,000 and in some country areas properties can be obtained for as low as $20,000 to $30,00.

The maximum price of a house which can be bought under the GoodStart scheme is $150,000.

This only applies to Homeswest houses.

"Money raised from the sale of Homeswest rental properties will go back into the Homeswest rental account and can be used to build new rental housing stock," Dr Hames said.

He said that not all Homeswest homes would be available initially for purchase under the scheme and interested buyers would be made offers of alternative vacant properties if their own rental property was not eligible.

Key features of the GoodStart include:

·      no deposit home finance with a fixed interest rate of 6.5 per cent until the borrower's income exceeds Homeswest's maximum rental income eligibility limits. The rate will then move to the Commonwealth Bank standard home loan variable interest rate subject to a minimum interest rate of 6.5 per cent;

·      all rates and insurance amounts built into the repayments so low-income buyers will not face hefty annual bills for these charges;

·      assistance towards fees involved in home purchase up to $1,500;

·      no GoodStart borrowers will pay more than 25 per cent of their gross income, including all rates and insurance, on repayments; and -

·      co-owners are permitted and immediate family members can contribute funds to increase the equity position.

GoodStart will be administered through Keystart, Homeswest's home finance arm.

"Although existing Homeswest schemes such as Keystart home lending and the Right To Buy program perform a wonderful service helping many low-to-middle income people into Home ownership - there are still many people who cannot qualify under these schemes," the Minister said.

"GoodStart opens a new window of opportunity for these people who may have felt locked out of home ownership altogether."

Dr Hames said increased levels of home ownership would strengthen neighbourhoods and the social fabric of our society.

"I must stress that nobody will be removed from his/her rental home to make way for someone buying it. So those tenants not wishing to move into home ownership need not worry," he said.

Interested Homeswest tenants are urged to call the hotline number on 1300 366 055 for further information.

Media contact: Caroline Lacy (08) 9424 7450 or 014 791 7819