Page 939 - Week 03 - Wednesday, 25 February 2009
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
When the bill was introduced for debate last year, Greens MLA Dr Deb Foskey sought some advice from the Consumer Law Centre. She was surprised to discover that the ACT government had not also sought this advice. While welcoming this initiative as a lateral approach to affordability issues, the centre raised a number of concerns. Let me quote briefly from comments made to Dr Foskey’s office. The centre advised as follows:
There is no doubt that the changes will have an impact on how credit providers view the market for consumers taking up the land rent option. For example, how will the changes effect amounts credit providers are prepared to make available and on what terms? Will it impact the thresholds at which mortgage insurance is required or available and the cost and terms of that availability? Has Government had this type of conversation with large credit providers or industry associations? If so, it would be very useful to know something of their response and their willingness to work with the changed arrangements.
It also said:
Separate, though related, questions of priority in the repayment of debt may also present challenges. In a property market where there may be some downward pressure on prices the incidence of negative equity is likely to increase. It will be important for Government to have regard to how it exercises its rights in such situations so as not to exacerbate hardship, even crisis.
It is worth making the point that David Tennant and the Consumer Law Centre were raising concerns about unsustainable credit and increased pressure on low to middle-income families a year before the market collapse. They do have the runs on the board, as it were. The best information and the best advice, in economies as well as other domains, often come from the margins of our society. We would like to see the ACT government look more carefully at this scheme and develop a plan to get it moving.
I know that there will always be statements that a bank or another business, or indeed a number of businesses, are interested, that there are market sensitivities and that, while issues will be sorted out soon, none can talk about it yet. But given that it is such a good idea, one of these days it will succeed.
That may not be very reassuring to people who have completed the CIT information course and are signed up to participate in this new form of homeownership. Those people, and others in waiting, as it were, need to know that more action is now being taken to get the scheme up and running as quickly as possible. There will also be many comments made that this approach is and always was simply a recipe for disaster and that no-one should invest in a house if they will not own or virtually own the land because that is where the value of the asset lies. Of course, in a time of recession or depression, it will similarly be the value of the land that falls, leaving heavily mortgaged homeowners at risk of negative equity.
The ACT has a leasehold system, which does allow for a different model and which, if the right protections are in place, offers an affordable step up to homeownership.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .