Budget 2019

A boost for affordable housing finance

The government is seeking to help individuals who earn too much to qualify for a fully subsidised house but too little to qualify for a home loan.

Picture: File, Sowetan
Picture: File, Sowetan

The government plans to help you if you are a first-time home-buyer who earns too much to qualify for a fully subsidised house but too little to qualify for a home loan.

It will grant the National Housing Finance Corporation R950 million over three years to administer housing subsidies linked to finance, Finance Minister Tito Mboweni announced in the Budget on Wednesday.

The programme called “Our help to buy” subsidy is targeted at providing some 18,185 households with subsidies to access mortgages over the medium term. The allocation to the programme is expected to increase from R100 million in 2019/20 to R500 million in 2021/22, the Budget Review notes.

FNB has welcomed the announcement saying that while government has made some inroads into addressing the demand for affordable housing, the supply of well-located, zoned and serviced land, with suitable top structures and acceptable amenities continues to significantly lag behind the fast-growing demand.

Dr Christoph Nieuwoudt, CEO of FNB Consumer, says even where there are affordable housing opportunities, low income earners struggle to get access to mortgages, there are massive backlogs in most deeds transfer offices, and credit rating criteria are very prohibitive.

This prevents the majority of low-income households from owning their homes and unlocking the value of their properties to alleviate poverty, he says.

FNB Home Finance is trying to encourage home ownership with home loans of up to 110% of the property value and a 50% discount on attorney fees, among other benefits.

The Budget also announced the introduction of two new grants to upgrade informal settlements, impacting 231,000 households.

The grants, which will be “through partnerships between the communities, and provinces and municipalities”, will total R14.7 billion in 2020/21 and 2021/22.

“Funding for the grants was reprioritised from the human settlements development grant and the urban settlements development grant to metropolitan municipalities,” the Budget says.

To achieve improved efficiencies, economies of scale and a more sustainable housing finance model, the National Urban Reconstruction and Housing Agency and the Rural Housing Loan Fund have merged with the National Housing Finance Corporation late last year.

“This was the first step towards establishing a new, consolidated finance institution for the development of human settlement,” the Budget says.

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