Affordable Equity Programme
Under the "affordable equity" model a household purchases a share of the home to a level they can afford (subject to certain parameters and conditions). The remainder is owned by Homes for People and both parties would be represented on the property title. The household organises their own mortgage with the advantage under this arrangement that they have a smaller mortgage than they would ordinarily require to purchase the market valued property.
See the example figures below for a 75% ownership share:
Property's market value $250,000
Value of 80% of the property $200,000
Household buys their home with mortgage plus deposit $200,000
Homes for People retains 25% passive ownership of the house. Homes for People 's ownership is the difference between the value of the home and the amount the household (shared owner) can provide. The householder's funds come from their deposit saved and the mortgage amount borrowed from the bank. In the above example Homes for People 's ownership amount is $50,000.
Under this arrangement, the householder will need to secure their own mortgage from a bank. They can also choose to increase their ownership percentage at any time.
The benefits of Shared-Ownership
You get all the privileges of ownership without funding 100%.
You buy what you can afford.
Your share grows in proportion to your investment.
You can increase your share to 100% over time
When you want to move on, you sell your equivalent share (e.g. 80%) back to Homes for People, or to the open market, based on an independent valuation less a management fee.
Find out more detail about Affordable Equity in our Frequently Asked Questions FAQs
Frequently Asked Questions (FAQs)
What is the minimum deposit required?
If you have $10,000 or more and would like to own your home, you will be considered for our Affordable Equity programme.
Where are the houses?
We are currently looking for Applicants for our Limbrick St, Palmerston North housing project of one and two bedroom homes.
How big are the houses and are they new?
The properties will generally be new, or near new, one or two bedroomed homes, often as units. A few homes will be for larger households and on their own sections. They will generally be either brick and/or weatherboard construction, include a car-parking space or carport, concrete driveway, fencing and clothesline. The houses will also have floor coverings and curtains.
Can I make changes to the houses being built?
No - The design and plans for the houses are determined by the builder. Shared home owners are not able to amend the design or plans. They may make minor alterations once they have purchased the house, with the prior consent of Homes for People.
Who decides the market value of the house?
Homes for People obtains a market value from an independent registered valuer. Homes for People pays for this valuation.
What role does Homes for People play as shared owner?
Homes for People plays a passive role. They do not charge any interest or rent to the householder for its share of the dwelling. When the property is sold, both the householder and Homes for People get their share of any increase in the value of the property.
How often can I increase my share in the house?
On the anniversary of your purchase date you may make an application to Homes for People to increase your share, in 5% blocks, up to a maximum of 85%. The property is revalued each time you wish to increase your equity to determine the cost of your increased share.
Is there a time frame for me to achieve full ownership of the house?
So others can benefit from the Affordable Equity product, we ask you to increase your share of the property as soon as circumstances allow you to. You need to be increasing your share of ownership within 10 years of being in your home.
What happens when I reach 85% share?
The next increase is to 100% ownership.
What other costs will the homeowner have?
Rates, insurance and all maintenance. However, because the house will be brand new there should be little in the way of maintenance. Homes for People charge a small annual management fee (currently $500 + GST) to undertake an annual inspection and ensure our interest in the house is being properly maintained.
How do I apply for Affordable Equity?
Check our Step by Step Guide for our basic criteria. Then complete and return the Registration of Interest Form.