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Government backs innovative home ownership plan

2 September 2005

Government backs innovative home ownership plan

A $6.7 million interest free loan is being provided to the New Zealand Housing Foundation to enable it to purchase land and construct affordable homes in the Auckland region, Housing Minister Steve Maharey announced today.

The land purchased with the money will support, among other things, the foundation's innovative home equity programme, where homes will be offered for sale to first-time home buyers. The foundation will hold an equity stake in the properties to enable an easy transition into home ownership for low-income buyers.

"The Housing Foundation has come up with practical solutions to provide people with affordable housing and help them get into home ownership in what is an expensive market," Steve Maharey said. "The Foundation's stake in the homes will make it possible for low and modest income families to finance a loan.

"Once buyers have built up some equity, they will be able to buy the foundation out and the foundation can then move on to helping another family into home ownership. This is exactly the kind of innovative, sustainable approach that the government is keen to support.”

Steve Maharey said Labour would introduce an Equity Share Scheme and increase low-interest loans and grants through the Housing Innovation Fund in a third term, initiatives which will compliment and support the work of organisations like the Housing Foundation.

The $6.7 million loan is being administered by Housing New Zealand Corporation and drawn down as required for land purchases, subject to HNZC approval. The loan is interest-free for two years and will then be refinanced.

The New Zealand Housing Foundation is a registered charitable trust formed in 2001. It aims to be a catalyst for growth in the community housing sector, by encouraging specific affordable housing projects that would otherwise not happen.

"The Housing Foundation shares the government's goal of encouraging communities to get involved in social housing. A strong community housing sector will be absolutely necessary to ensure the long-term affordability of our housing market.

"The Foundation's work to help low and middle income families into home ownership fits well with the government's efforts. With KiwiSaver and Welcome Home Loans, the Labour-led government will help 8,000 families buy their first homes every year."

ENDS

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