A boost for affordable housing finance
Subsidies help with mortgage access
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 R950m over three years to administer housing subsidies linked to finance, Tito Mboweni announced in the Budget yesterday.
The programme, called “Our help to buy” subsidy, is targeted at providing some 18, 185 households with subsidies to access mortgages in the medium term.
The allocation to the programme is expected to increase from R100m in 2019/20 to R500m in 2021/22, the Budget Review notes. FNB has welcomed the announcement, saying 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. 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 criteria for granting credit are very prohibitive. This prevents most 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 introduction of two new grants to upgrade informal settlements, impacting 231, 000 households, was also announced in the Budget. The grants, which will be “through partnerships between the communities, and provinces and municipalities”, will total R14.7bn 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.