A real estate expert has raised the spectre of the Government's shared equity pilot scheme being abused by property investors cynically using the funding as a "lolly scramble".
Thursday's Budget confirmed $35 million in new capital will be spent in the next two years to help families witha shared equity pilot scheme to get about 700 households into starter homes.
But Alastair Helm, chief executive of realestate.co.nz - owned by large agencies and the Real Estate Institute - says landlords might take advantage of the scheme.
Housing Minister Maryan Street wants to target people who had saved a deposit for a home but who cannot get on the property ladder in the area where they live and work because prices are too far ahead of the maximum mortgage they can afford. Shared equity involves the Government taking an equity share in a house to reduce the size of an aspiring home owners' mortgage.
Helm predicted the scheme could end up being like share floats of the 1980s and being wildly over-subscribed.
"I just want to highlight a potential for the best of intentions to end up benefiting those who would not be classed as a key target," he said.
A Wellington couple with an $18,000 deposit and earning $83,000 collectively would be eligible for the scheme, Helm said.
Buying a two-bedroom unit in Newtown for $255,000 would on the face of it make them seem perfect candidates for a 20 per cent Government loan.
But Helm said the scheme could be manipulated - for example if the woman's father was a property investor who had loaned them a deposit. The couple might have no desire to live in the unit and rent it out and the investor would end up getting a state-subsidised loan.
HOW TO QUALIFY * Intend to live in the house
* Have a 5 per cent deposit
* Earn less than $85,000
