Half-price homes

[Happy]

From Yahoo7 News, Today Tonight


REPORTER: Helen Wellings
BROADCAST DATE: November 21, 2006

A much-needed boost for first home buyers?

The latest scheme to get people into their own home means paying half the price of a house. But is it too good to be true? Helen Wellings investigates.
Real estate tycoon Keith Johnson says he wants to give something back to the people and thinks other developers should do the same.
He heads Johnson Property Group, which owns $3.5 billion worth of housing estates, with more in the pipeline. His mission is to finance people into homes, using the money he makes from land sales.

Hopeful first home buyer Christie Venegas is among them.
"It's really hard to get into the market for us, looking and not having bought anything before," Christie said.

Mr Johnson said people needed "a hand, not a handout".
"It is a great opportunity for people to put money, rather than paying rent, into their own building."

His main target was struggling first home buyers, especially young couples stuck in the rent trap who don't qualify for full bank finance.
Would-be buyers choose a house/land package in one of his nominated subdivisions, borrow half the price and Johnson First Homes Loans pays the other half.

"Johnson First Home loan works by the buyer buying 50 per cent of their home, with the bank giving them that mortgage," Mr Johnson said.
"We hold the other 50 per cent and any time in the next years, with the equity they have built up, they buy it back off us interest-free."

The idea is that buyers pay as much as they can of their half-loan back to the bank over the first five years. They then have up to 10 years to pay the other half back to Johnson, interest-free.
Hopefully, in 10-15 years, the buyers then have 100 per cent equity, owning their own home.

"Being first home buyers, being fairly young to start with, we're just finishing courses at uni and we'll be on single income," Christie said.
"So this is something that can really help us get started."

But Johnson First Home Loan will be choosy about who qualifies. Newly trained teachers Christie and John Venegas have been trying to get into the property market for years.
Now, with a baby on the way, their dream may come true.

"Well I guess it's something that's going to be helping us out rather than just a first home owner's grant, it's something that's more ongoing," John said.

Real estate watchdog Neil Jenman said the shared equity scheme did seem like a great deal.

"I'd love there to be a Santa Claus developer there, a real one, because there's never been one before, they've all been big, bad ogres," Mr Jenman said.

He said, to his knowledge, it was the first time something like this had been done in Australia and it was worth checking out.
But he cautioned that prospective buyers should read the contract carefully, so they know exactly what the rules are.
"As well as getting an independent lawyer, get an independent valuer and if those two things stack up, then you're on a winner with this one," Mr Jenman said.
"If they don't stack up, you're on a loser. That's how you tell. Lawyer, valuer independent. Get those and see what they say."

Mr Johnson is encouraging others in his industry to join the scheme.
"I challenge other developers to join and make it happen in their subdivisions as well," Mr Johnson said.
"We are asking everyone involved in our subdivision, home builders, road builders all to join with us to make this scheme happen."
Now, with a baby on the way, their dream may come true.

"Well I guess it's something that's going to be helping us out rather than just a first home owner's grant, it's something that's more ongoing," John said.

Real estate watchdog Neil Jenman said the shared equity scheme did seem like a great deal.

"I'd love there to be a Santa Claus developer there, a real one, because there's never been one before, they've all been big, bad ogres," Mr Jenman said.

He said, to his knowledge, it was the first time something like this had been done in Australia and it was worth checking out.
But he cautioned that prospective buyers should read the contract carefully, so they know exactly what the rules are.
"As well as getting an independent lawyer, get an independent valuer and if those two things stack up, then you're on a winner with this one," Mr Jenman said.
"If they don't stack up, you're on a loser. That's how you tell. Lawyer, valuer independent. Get those and see what they say."

Mr Johnson is encouraging others in his industry to join the scheme.
"I challenge other developers to join and make it happen in their subdivisions as well," Mr Johnson said.
"We are asking everyone involved in our subdivision, home builders, road builders all to join with us to make this scheme happen."
Now, with a baby on the way, their dream may come true.

"Well I guess it's something that's going to be helping us out rather than just a first home owner's grant, it's something that's more ongoing," John said.

Real estate watchdog Neil Jenman said the shared equity scheme did seem like a great deal.

"I'd love there to be a Santa Claus developer there, a real one, because there's never been one before, they've all been big, bad ogres," Mr Jenman said.

He said, to his knowledge, it was the first time something like this had been done in Australia and it was worth checking out.
But he cautioned that prospective buyers should read the contract carefully, so they know exactly what the rules are.
"As well as getting an independent lawyer, get an independent valuer and if those two things stack up, then you're on a winner with this one," Mr Jenman said.
"If they don't stack up, you're on a loser. That's how you tell. Lawyer, valuer independent. Get those and see what they say."

Mr Johnson is encouraging others in his industry to join the scheme.
"I challenge other developers to join and make it happen in their subdivisions as well," Mr Johnson said.
"We are asking everyone involved in our subdivision, home builders, road builders all to join with us to make this scheme happen."
Now, with a baby on the way, their dream may come true.

"Well I guess it's something that's going to be helping us out rather than just a first home owner's grant, it's something that's more ongoing," John said.

Real estate watchdog Neil Jenman said the shared equity scheme did seem like a great deal.

"I'd love there to be a Santa Claus developer there, a real one, because there's never been one before, they've all been big, bad ogres," Mr Jenman said.

He said, to his knowledge, it was the first time something like this had been done in Australia and it was worth checking out.
But he cautioned that prospective buyers should read the contract carefully, so they know exactly what the rules are.
"As well as getting an independent lawyer, get an independent valuer and if those two things stack up, then you're on a winner with this one," Mr Jenman said.
"If they don't stack up, you're on a loser. That's how you tell. Lawyer, valuer independent. Get those and see what they say."

Mr Johnson is encouraging others in his industry to join the scheme.
"I challenge other developers to join and make it happen in their subdivisions as well," Mr Johnson said.
"We are asking everyone involved in our subdivision, home builders, road builders all to join with us to make this scheme happen."

Contact details: Johnson Property Group
Level 8, 5 Macquarie Street, Sydney 2000
Phone (02) 9899 1888
www.johnsonpropertygroup.com.au

Needs to be carefully examined, but if somebody can manage to save, any interest free loan is like getting into pocket whatever home loan interest rate is now.

Question is if TAX Department will try to tax this gift?
So they have to be asked for their ruling too, before embarking on this almost too good to be true scheme.

I wonder if our resident developer gives thumbs up, or thumbs down to this project?

 

[YOUNG_TRADER]

Nothing in life is free,

I'm always very sceptical/cautious of such generous offers

"Beware the Greeks especailly when bearing Gifts"

 

[Julia]

Nothing in life is free,

I'm always very sceptical/cautious of such generous offers

"Beware the Greeks especailly when bearing Gifts"

I share your scepticism.

Julia

 

[Rafa]

Me too...

 

[professor_frink]

This guy has estates in my area that have lots of empty blocks in them, with lots more new estates about to come online.
Offering help to people that wouldn't normally be able to fill up those empty blocks could fix that problem for him

 

[Kauri]

The idea is that buyers pay as much as they can of their half-loan back to the bank over the first five years. They then have up to 10 years to pay the other half back to Johnson, interest-free.

Is the developers half valued at the original price or at the current market price at payoff time??
What happens to the debt owed to the developer if after paying the bank mortgage and saving to pay the developers half you don't have enough to pay it off??

 

[marklar]

More McMansions... buy now, worry about how to pay for it later.

The developer isn't offering this out of the goodness of his own heart, he's found a way to make a quid while looking generous.

m.

 

[nioka]

Nothing in life is free,

I'm always very sceptical/cautious of such generous offers

"Beware the Greeks especailly when bearing Gifts"

I know a firm who marks everything it sells up 200% then gives a 50% discount on sales. Their customers think they get a great deal.

 

[money tree]

why is a large chunk of the article repeated 4 times?

and how come none of you noticed?

"The idea is that buyers pay as much as they can of their half-loan back to the bank over the first five years. They then have up to 10 years to pay the other half back to Johnson, interest-free."

if it takes 5 years to pay off 50% principle & interest, why is it taking 10 yrs to pay off the other 50% principle only?

 

[phoenixrising]

What happens if the developer goes belly-up?

 

[The Mint Man]

sounds a bit like vendors finance to me, only difference being that half of the funds are already paid by the bank to the developer (instant cash) and there is 10 years interest free for the buyer on the other half....

So in this case the vendor is only taking on 50% of the finance and only for 10 years at an interest free rate, however I would like to see what happens to that interest free rate after the 10 years.
Usually with vendors finance the price of the house would reflect what the vendor sees as a fair price considering they are helping get people into their own home....without paying full price straight up, this price is usually more then what the current market would pay.

Usually (under normal vendors finance) the expectation would be for the buyer to refinance some time down the track in order to pay the vendor out.

cheers