Wellington, June 7, 2017
UnitedFuture has announced a new rent-to-own policy for housing to deliver housing to a generation of New Zealander’s currently locked out of the housing market
UnitedFuture is advocating for opening an additional avenue for home ownership that targets those who are currently locked out of a market that is seeing too few young families able to achieve the security of home ownership.
Our plan is simple. We would allocate half of the affordable houses being constructed under the Government’s building programme in Auckland to be included in a new rent-to-own scheme that would provide a new opportunity to people who have difficulty in meeting the financial requirements around buying a house.
We would offer these houses as rental properties that people could lease, provided they lived in that property and pay market rent.
The Rent-To-Own Policy
Of the 20,600 homes the Government has announced to be built in Auckland as affordable homes, half of them would be offered as rental properties under this scheme.
A portion of that rent would be paid to the Government as rent that will cover fixed costs (such as rates) and deliver some income to the Government.
The balance of the rent will then count towards purchasing a share of ownership in the house in question. This means that the payments act as mortgage payments and give tenants a pathway towards owning an increasing share of a property.
At the time a tenant owns enough of the property to count as a deposit, they will be offered title to the property. They will then need to find appropriate financing for the property (a bank mortgage for example).
This policy was aimed at people who were currently shut out of the market by prohibitive deposit requirements.
A generation of New Zealanders are facing the prospect of home rental for the rest of their live and this policy would put them on a pathway towards home ownership.
Savings to Deposit
The rent people pay would be accumulated as savings earmarked for a home deposit. There is not that much difference in principle between this policy and the Government’s plan to build affordable houses to sell.
What we are changing is the way they are sold and who they are sold to; we want to see specific targeting of people who are struggling to save for a deposit and pay their rent at the same time.
This is a first step in opening up new avenues for housing affordability.
I would hope that it could be expanded into other centres where Central and Local Governments have accommodation building programmes and indeed be used as a template for private housing developers, who would benefit from the ongoing and secure stream of revenue this policy would provide.
Peter Dunne is Internal Affairs Minister of New Zealand and Leader of UnitedFuture Party.