State waters down shared equity scheme

16/10/2008 - 09:30

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The state government will take a maximum stake of 25 per cent in homes under the revamped First Start shared equity scheme which this week received a $70 million lifeline.

The state government will take a maximum stake of 25 per cent in homes under the revamped First Start shared equity scheme which this week received a $70 million lifeline.

Housing and Works Minister Troy Busweel said the government's share of equity will now be a maximum of 20 per cent for singles and 25 per cent for families, down from the previous stake of 40 per cent.

This week, Cabinet approved a further $70 million for the shared equity scheme after its allotment of $300 million under the previous government ran out after 18 months.

One quarter of the new funding will be reserved for regional areas.

Mr Buswell expects the $70 million injection to cater for a further 1000 first home buyer applications this financial year.

He added that priority will be given to the 450 applicants who missed out when the scheme was suspended last month.

Other revisions to the scheme include the lowering of the maximum property value by $20,000 to $355,000 in metropolitan areas while the maximum of $375,000 will be maintained in regional areas.

"I don't expect the slightly lower ceiling on property value to be a problem, the easing we have seen in property prices should compensate for that," Mr Buswell said.

Income eligibility will be capped at $50,000 for single applicants, $60,000 for couples and $70,000 for families.

A full assessment of the scheme will be carried out next year.

 

Below is the full announcement:

 

Treasurer and Housing and Works Minister Troy Buswell today announced revised criteria for the First Start shared equity scheme to ensure the most needy first home buyers continue to be helped and that an extra funding injection will last the financial year.

Cabinet, this week, approved an additional $70million for First Start after its initial allocation of $300million over three years ran out after only 18 months.

Mr Buswell said income eligibility would now be capped at $50,000 p.a. for single applicants, $60,000 for couples and $70,000 for families.

The maximum property value for First Start applications had been lowered by $20,000 to $355,000 in the metropolitan area but will remain at $375,000 in regional areas.

One quarter of the $70million new funding will be reserved for regional areas where, in some centres, housing affordability is even more severe than in Perth.

The Treasurer also announced a reduction in the level of equity the Government was prepared to underwrite. Currently set at 40 per cent of the property value, the State Government's share of equity would now be a maximum of 20 per cent for singles and couples and 25 per cent for families.

Mr Buswell said First Start had been highly popular since its inception in February last year, with around 2,500 applicants gaining approval for shared equity and a low deposit Keystart loan for the balance.

"Quite clearly, however, the scheme was unsustainable in that form and it was necessary to adjust the settings if we were to reinstitute it in a way that would help as many low income applicants as possible right through to June 30 next year," he said.

"I don't expect the slightly lower ceiling on property value to be a problem, the easing we have seen in property prices should compensate for that."

The Government expected the $70million would provide shared equity assistance for up to a further 1000 first home buyer applicants this financial year.

When the original funding ran out, around 450 applications fell into abeyance. The Treasurer said these applicants could now be evaluated and would be given priority status. They would be given the opportunity to submit new applications on the basis of the new criteria if they wished.

"This scheme has made the dream of home ownership come true for many West Australians, so it is important that we keep it going until it can be comprehensively reviewed," Mr Buswell said.

A full assessment of First Start, including the impact of the new targeted approach, would be conducted in 2009 with a view to developing an overall funding model in time for the 2009-10 budget.

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