Shared Equity – ScoMo – welcome to the real world!

John Hargreaves 12 March 2017 2
affordable housing

I saw in the various media that the Federal Treasurer, Scott Morrison has had this fantastic idea to alleviate the housing stress around Australia. One of his brainwaves has been shared equity in housing where the owner actually owns a major part of the home and the Government/bank own the rest.

This initiative at the federal level is to be applauded and developed.

But it is not new. Sorry ScoMo, some of the States and Territories have been down that track decades before you thought of it.

In fact, the ACT committed to such a scheme as far back as 2007, when in April of that year, the Chief Minister, Jon Stanhope tabled the Affordable Housing Action Plan. You can check out the whole plan for further brainwaves in the Affordable Housing Action Plan 2007 on page 15.

In his Foreword to the Plan, Mr Stanhope said, “As different needs cluster around the various stages of the housing continuum, the strategy outlines initiatives to improve access to affordable housing at all levels. Therefore it covers options for people accessing or eligible to access:

  • Home Ownership;
  • Private Rental;
  • Community and Not For Profit Housing;
  • Public Housing; and
  • Supported Accommodation, including Emergency Housing.”

These options included shared equity.

On page 15 of the Plan, it says: “Introduce a shared equity program for eligible tenants through enabling Housing ACT to retain equity in houses sold to tenants”.

In much of the discussion on social and public/community housing, there has been a concept not really understood by policy developers and observers alike. That concept is the notion of a continuum of housing ownership/tenancy.

The continuum starts for many in a shared house, moving to an apartment or house which is rented, then moving to a house which is bought, then downsizing as ageing takes hold then going into a nursing facility in advanced age. But this continuum is only the general guide.

For the affluent, it is moving from Mum and Dad’s house to a house/apartment which is bought and later upsizing as families increase in size. But these people are never tenants and don’t experience housing stress.

There are many in our community who experience housing stress throughout their lives and they are often dependent on public or community housing for affordable rents.

Their continuum can be from Mum and Dad’s place to a shared house, then possibly to homelessness for a while, into crisis accommodation for a limited period or periods, then onto the housing list, often spending time in community or social housing, before they are finally allocated an apartment or house. Sometimes they go through this loop a number of times before being rescued. Their chance of owning a home was zilch until the ACT introduced shared equity for its own properties and tenants.

The idea was that tenants could buy the home at 70 percent of the property with 30 percent being retained by Housing. This was to allow those people on low incomes to finance their properties through a loan with IMB for the 70% and with a loan repayment system with Housing for the remaining 30%. However, from the time the agreement started, the home was 100% owned by the former tenant.

Details of this scheme can be found on the Shared Equity Fact Sheet.

The hope was that this scheme would progress to the private marketplace. Hasn’t happened but there is no reason why it couldn’t on a first and second mortgage basis but the banks won’t touch people on $35,000 a year.

The idea was to interrupt the continuum of despair, to give the desperate a chance to own their own home and goodness knows what that fillip gives to those at the bottom of the ladder. Owning a home was before that initiative, an impossible dream and when it was a reality, it gave a boost to the self-esteem of the downtrodden such that they were able to forge ahead with a pleasant and meaningful life, otherwise denied them.

When I was a minister for housing, I responded to a Legislative Assembly Standing Committee on which looked into “Appropriate Housing for people living with a mental illness”. In giving the Government response to that report I indicated that there was the opportunity for people to own their own homes, that there was hope, that here was a sound foundation on which to build a future. Among other things, I referred to the shared equity scheme. You can see that response at Appropriate Housing for People with a Mental Illness.

So I guess that we should applaud the feds for coming up with something positive for those in our community for whom housing stress is a real problem, a real obstacle to a bright future; that it does recognise that a secure roof over our heads is the springboard we need to enhance our chances of a good life, of enhanced self-esteem and the benefits which flow from that.

I just wish that the feds would not dress up something which has been tested and proven to be efficacious as something of their own. They have paid respect to the programs in the UK but not that the States and Territories may just be doing this already!

I first heard about this possibility in about 2005 or 2006 when I was minister for Housing and thought it a ripper! It just needed tweaking to suit the ACT and Housing ACT did just that. That it became a plank in the Affordable Housing Action Plan gave me immense pride and the efforts of the officers in Housing ACT who promoted it have gone unsung!

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2 Responses to Shared Equity – ScoMo – welcome to the real world!
agent_clone agent_clone 4:58 pm 13 Mar 17

My personal bright idea for making homes potentially more affordable is to only allow people to aquire new home loans for a maximum of two properties. This would effectively grandfather those who already have many mortgages on multiple properties. It would also reduce the potential negative gearing liability of the government and allow people to either own a property they live in, and an investment, or to switch properties. People can of course own however many places they want, but if they already have two mortgages they can’t aquire another until one is paid off.

The main issue I see with this policy may be in the availability of rental places however… I’m not sure how that would play out over time…

I’m not convinced that the shared equity scheme would do much except to drive up prices higher and potentially have funding issues with the government… I do think the extra tax on unoccupied properties in Victoria is a good one though depending on implementation (as I’m unsure as to how long a vacancy until the tax kicks in would be,but it encourages owners to either live in them or rent them out).

melsie melsie 2:28 pm 13 Mar 17

There have been variations of this scheme in WA for at least 10 years through keystart home loans. It’s a shame that property prices are continuing to spiral so out of control in the ACT that even with these schemes, the 70% becomes unmanageable for many.

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