Opinion

Public housing buyers

Even when mortgage repayments are making us poor, buying a home is a mark of wealth. While we're plodding under the burden of repayments we keep going because we know we're buying financial and social independence, we know that the eventual upside is vastly more than the current downside. Unfortunately many people don't have this opportunity, and a great many of these people are public housing tenants. Worse, the negatives of public housing are likely to reduce the prospects of children, so public housing may become self perpetuating.

On Friday a respondent to my blog questioning the value of charity, Snooze, suggested that our charity in subsidising the rent of public housing tenants would be much more effective for everyone if we regarded their rent as repayments on a mortgage held by Housing NSW. Have a look at Snooze's comments in the previous blog.

A couple of days earlier the ACT Government announced a shared-equity scheme to help its public housing tenants buy their home, and that entails an interest-free loan of up to 30 per cent of the property value as a deposit for a loan at market rates from a certain building society. Public housing tenants in the ACT have been permitted for many years to buy the property but few could meet the commercial lenders' criteria for a loan. The details of these arrangements are in my column in The Herald today.

The advantages of promoting home ownership among public housing tenants are so powerful I'm surprised our NSW Government doesn't have such a scheme. Even in terms of charity, helping tenants buy their home is so much more life-changing than subsidising their rent can ever be. And as the proportion of private ownership in the big estates and complexes increases, the quality of community life will increase. Pluses all round, I say.

Do you share my view that helping public housing tenants to home ownership makes everyone a winner?

Posted By: Jeff Corbett on 27/11/2009 4:29:00 PM | Comments (26)

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I would want this scheme in place alongside some training on financial management. i.e. setting budgets, keeping to budgets, danger of credit cards, danger of 'no repayment for 24 months deals... etc. I can't see the downside of helping people building their own financial self confidence, but we need to give them every tool and help to make that happen.

Posted by leahkf, 30/11/2009 9:05:36 AM, on The Herald

rams will lend money to anyone right now so the excuse of "cant get a loan ' wont apply? But how do you instil pride of home ownership in people who may not have any pride in themselves and what they can achieve anyway? sorry beyond me this one ?'

Posted by notashink, 30/11/2009 9:32:30 AM, on The Herald

RAMS very unlikely to lend money to many DoH tenants. The interest-free loan for a deposit reduces the income required to service the mortgage and on that score alone may put home ownership within reach of people for whom the great Australian dream could never be. Surely that must be a good thing.

Posted by Jeff Corbett on 30/11/2009 9:39:42 AM

No. I can't agree with you Jeff. Your analysis ignores the fact that Housing NSW has nowhere near enough stock to meet the current demand. Each house that is sold has to be replaced to assist those in need in the future and the replacement houses will likely be more expensive and in worse locations. Previous waves of sell-offs in the 70's and later, have diminished the department's capacity to address the current need. We need greater investment in public housing for the future.

Posted by nick, 30/11/2009 10:20:30 AM, on The Herald

Jeff, this scheme was in place in the UK a decade ago - where long term social housing tenants had the chance to purchase a house that they may have lived in for many years. it seemed like a good idea but since then problems have emerged. You see, it meant that people had no incentive to ever try to better themselves. Why work hard to move out of your social housing situation when in a few years you may be offered the opportunity to purchase it at a lower mortgage that you can get anywhere else?? The other problem was that once people bought their house, there was nothing to stop them selling it at a profit, spending the money and then applying for social housing again - I personally know a family who did exactly this. Sure, people say don't allow them to do this, but 2 years down the track when a famly and 3 kids have nowhere to go its difficult to refuse them social housing again. The idea in england was to instill pride with the hope that ownership would lead to people to improve their homes and neighbourhoods. On the whole, it didn't acheive much except resentment by those who worked hard to get none of the benefits they would have been afforded by not working hard!

Posted by King Idiot, 30/11/2009 10:22:15 AM, on The Herald

Maybe I'm wrong but the ad said "nodoc " loans right now for housing. My guess was "nodoc'" meant that no disclosure were necessary as the payments were made and a mortgage applied? I guess in retrospect considering the advertising industry one has to not need the loan to comply with the no-documents provison an d the add was just a claytons bait add -as usual? spin and hype -the world went wrong on it and its all starting up again?

Posted by notashrink, 30/11/2009 10:56:32 AM, on The Herald

I think that you might find it instructive if you chased up the history of the failed UK scheme. King Idiot gives you a hint in his/her comment. I think "notashink"'s comment were quite negative about people in public housing. I live in public housing and have a ot of pride in myself and how I maintain this great dwelling.

Posted by bobbo, 30/11/2009 12:08:55 PM, on The Herald

This was done in Stockton years ago. The commission houses in the north of Stockton were offered to the tenants with their rent being the mortgage payments. This saved the comission the cost of maintenance and gave the tenant's family a wonderful bonus years later. One friend sold his beachfront house 4-5 years ago for $890,000. I found this amusing seeing as when I grew up in Stockton the place was considered a "hole".

Posted by G, 30/11/2009 12:25:24 PM, on The Herald

to relieve pressure for govt supplied housing in future we should make it a proviso that anyone granted public housing must have their children sterilised and their rotties and staffys monoxided.

Posted by catl, 30/11/2009 1:34:42 PM, on The Herald

Nick, how does the current system address the issue of Housing NSW not having enough stock to meet the current demand? You say that public housing needs more investment. Perhaps the Housing NSW could implement a similar scheme that the Defence Housing Australia operates or offer some sort of bonds or stock that investors could put money into.

Posted by Direct, 30/11/2009 1:42:07 PM, on The Herald

If Housing NSW want to sell their properties on the private market ought not they be made to conform to basic building standards. Go have a look for yourselves at the shoddy workmanship, the cheap windows, poorly aligned walls and doors, staircases dangerously steep, plumbing installed without traps and venting directly to the sewer. Ask any contractor who services Housing properties.

Posted by GetReal, 30/11/2009 1:44:25 PM, on The Herald

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