• Does the owner have to meet any interest payments to QLCHT for their share in the property?
No. QLCHT will take a passive equity interest in the property of up to 40% so that the owner only needs to finance at least 60% of the purchase price with their deposit (minimum 5% of entire property) and borrowings. The Homeowner is required to pay an annual management fee of $350 plus GST to the Trust to cover an annual inspection and administrative costs for the year.
• I have heard that Housing New Zealand is financially supporting the Shared Ownership programme. Does that mean the homeowner will have a contract with Housing New Zealand?
No. The owner will have a normal mortgage document with their lender and will also be required to sign a Tenants in Common agreement with the Trust. There will be no documentation between the Homeowner and Housing New Zealand.
• What is a "Property Sharing Agreement"?
It is the legal document that recognises that QLCHT and the Homeowner both have a shared interest in the property as 'Tenants in Common'.
• Can an owner buy out QLCHT's interest in the property?
Yes. An owner can staircase their % ownership and buy out QLCHT's interest in increments of 5% minimum which can be done no more than once annually. The staircase price will be based on the maximum of either current market valuation or the original purchase price of the house. If an owner wishes to increase their share over 85% they will be required to purchase the whole of the balance based on valuation at that time.
• Will the programme simply drive prices up further?
We don’t think it will – this is only a very small part of the market. The programme is very focused on assisting specific households that meet strict eligibility criteria and QLCHT will be instrumental in the initial selection of the properties. It is also just one initiative we are putting in place to address the affordable housing problem.
• What if the market goes down?
The focus of the programme is to provide security of tenure for homeowners and the ability to build equity over time. The owner is not exposed to fluctuations in the market price – until they sell. Proceeds of sale are then shared based on the equity split, thus it is a risk any homeowner takes that the market price of their house may drop upon resale.
• Can an owner sell to anybody else at any time?
Yes, but only if QLCHT does not exercise its first right of refusal to purchase at the market assessed price.
• What happens if the owner can’t raise 70% of the value of the property?
Share allocation of the property is calculated using the income and asset tests to assess what each household can afford for the type of house it needs. Hence some households will start with a 60-40% share allocation while others may have a different ratio.
• What happens if the owner does not meet their mortgage payments?
The Lender will likely serve a written notice to the Homeowner and if the problem is not rectified QLCHT may protect its share by enforcing the Homeowner to sell their share to QLCHT. This is the worst case scenario and may be prevented by discussing your situation with QLCHT first.
• What happens if owners are in a partnership and one partner dies?
The survivor continues to be the Shared Homeowner.
• What happens if the sole owner or both owners die?
Their estate requests to sell their share to QLCHT (at current market value) – Homeowner agrees to this in their agreement with QLCHT.
• What happens if partners (spouse or otherwise) separate?
QLCHT may choose to require the owners to have the property valued and sell their share to QLCHT. This is something which will be reviewed on a case by case basis.
• What financial obligations is the Homeowner responsible for in relation to the property?
All outgoing costs, charges and fees e.g. water and council rates, as well as loan/mortgage repayments, insurance premiums, valuation expenses, body corp. fees if applicable and the cost of keeping the property in good repair and well maintained.
• What happens if the Homeowner fails to meet any of the above obligations?
QLCHT will issue written notice then after ten days if the problem is not fixed QLCHT may rectify the problem itself. If the owner then fails to repay the charges, QLCHT may reduce the owners share in the property to collect the outstanding amount. Once again this is a worst-case scenario which may be averted by early discussions of any issues with QLCHT staff.
• Can the Homeowner grant or transfer any interest or mortgage in the property, or sublet to a third party?
Not without written consent from QLCHT first.
• Can the Homeowner alter the property?
Only with prior QLCHT approval if the alterations require building or resource consent, and at the sole cost to the Homeowner. Any loss, damage or other costs resulting from undertaking any improvements is then sole responsibility of the owner. Any enhancements to the value of the property as a result of improvements are shared according to the share allocation of each party.
• Can the Homeowner choose any bank or money lender for borrowing on the property?
Yes - so long as the bank understands and has approved the Property Sharing Agreement. This will be discussed with applicants at pre-approval stage.
• Can the Homeowner use a family trust to purchase the home?
No – the property must be purchased in the names of the homeowners only. This is to avoid complications involving unknown beneficiaries of family trusts in the event of the death of the homeowner/s.
• What happens if the Homeowner wants to sell?
► Inform QLCHT and pay application fee.
► Select valuer from QLCHT's list
► Offer share to QLCHT at price determined by valuation
► If owner decides it’s worth more than the price determined by valuation they may place it on the open market with a reputable real estate firm. When a legitimate offer is made in writing QLCHT then has first right of refusal at that price. QLCHT may then choose to buy owner out or allow property to be sold on open market.
• Can QLCHT sell its share to anyone else?
Not unless QLCHT were no longer to exist, and only then to a central or local government-controlled organisation or one similar to QLCHT with structure, intent and obligations akin to the QLCHT's.
• Who pays for legal costs related to all contracts and agreements between owner and QLCHT?
Each party pays for its own costs. The Homeowner is required to confirm they have obtained their own legal advice in respect to the agreement.
• What happens if the Homeowner starts earning above the maximum income threshold thus rendering them ineligible under the criteria guidelines?
Once you have purchased the property it is your home. It is anticipated that the above situation will occur from time to time, and it may be in the owners best interest to buy QLCHT out completely, or at least increase their share, in order to gain full ownership of the property, or sell out and trade up on their own.
• How does QLCHT assess and prioritise applicants?
Applications will be reviewed and processed on a first-come, first-served basis at the discretion of QLCHT. Matters which may be taken into consideration to determine ranking include, but are not limited to, preferred configuration of house (e.g. number of bedrooms & bathrooms etc), preferred location and catchment area (i.e. proximity of house to workplace).