Foundation whose charity begins at home

Chantelle and Nathan Francis at the Oratia home they are renting to buy in the NZ Housing Foundation's shared equity development. Photo / Martin Sykes

For couples raising families - even on above-average incomes - the ideal of home ownership in Auckland remains as elusive as ever. House prices have eased back 5 per cent, but from ridiculous heights. Interest rates are kinder but many banks now want 20 per cent deposits and are looking harder at incomes.

For Chantelle and Nathan Francis and their three children, home for six years was a cold, damp cheapie in Ranui.

"It was actually colder inside than out," says Chantelle. "You tried not to walk on the carpet - it was so wet, sometimes you could see droplets forming on top."

She suffered badly with asthma. Yet the couple were grateful their landlord let them stay for so long. Before that, the Zimbabwean migrants moved their young family four times in two years.

Nathan was earning good money as a plumber, while Chantelle coped with three under-5s and began studies at Unitec for a Bachelor of Finance degree.

"We had no chance of raising a deposit anytime soon," says Nathan. "You definitely would need two people working."

Says Chantelle: "The banks expected you to earn $70,000 before they would even look at you." And that at a time when banks were lending on 5 per cent deposits.

Through voluntary work in Ranui, she learned of a new housing estate being built by the NZ Housing Foundation, a charitable trust that assists families into home ownership.

The foundation is part-way through a 74-home subdivision at Glen Eden which offers both renters and those with small deposits the chance to own a home.

The Francis family moved into their warm, three-bedroom home at Christmas and, says Chantelle, "we're here to stay. I told my husband he's going to have to carry me out of here."

Under a rent-to-buy agreement with the foundation, they pay market rent for up to five years while saving for a deposit.

As the value of the property rises, they build up equity which effectively increases their deposit. They can then purchase at market value, less the equity they build up.

Some neighbours have already bought their homes using the foundation's shared ownership option. Typically, buyers finance 75 per cent of the cost and the foundation funds the rest, retaining 25 per cent ownership. Over time, the owners are encouraged to increase equity as their incomes rise, until they own the house outright.

Shared ownership suits people who are relatively debt-free and with some savings, says foundation executive director Brian Donnelly. "We sit in there as a mum and dad effectively," he says. "Our money is left in, interest-free, but we encourage them to buy us out down the line."

The scheme means families who can afford a $300,000 house but not a $400,000 one can buy a good quality home in a decent neighbourhood, he says. (And there aren't too many $300,000 houses suitable for a family of five in Auckland).

Shared ownership and equity schemes run by community housing trusts are common in Britain and the foundation believes they can do much to ease Auckland's affordable home supply crisis.

It aims to work with the Government, developers and institutional investors to build affordable homes on Crown land, including Housing New Zealand sites, and within private subdivisions. It raised $25 million, including a $6.5 million Housing NZ loan, for the Glen Eden development and plans to provide further homes in Auckland City, with the city council contributing $3.2 million.

"We see it as a model which can really fly, one which doesn't rely on any one party to do it all," says Donnelly.

The Glen Eden subdivision caters for a variety of income levels, and will include some homes designed for special needs and older residents.

Houses are positioned for maximum sunshine with north-facing yards and are well-insulated.

"It's not only about affordable access but ongoing affordability through minimising heating costs and low maintenance," says Donnelly.

Urban design features encourage neighbourliness while maintaining privacy.

He says rent-to-buy tenants become very house-proud, landscaping and planting gardens with the certainty they won't be kicked out six months down the track.

"It's in their interest to look after their home because they are gaining equity."

With shared ownership, the foundation expects buyers to finance between 60 and 85 per cent of the price while it funds the balance. Donnelly says the mix could change in future projects, with buyers contributing as little as 30 per cent.

"It's a paradigm shift in the way people think about home ownership, when they want to live in a particular area but can't quite get there."

Project manager Paul Walters says applicants for shared ownership must be first-time owners with household incomes of more than $55,000.

"They need to be deserving families who can demonstrate an ability to save but have insufficient deposit to get a bank loan. Some families have signed agreements and come and had picnics on the bare land."

For the Francis family, the rent-to-buy option means saving for a house while paying only $15 a week more in rent than they were in Ranui. They've made friends with neighbours and Chantelle has begun composting and plans a garden. Despite recent cooler nights, they've yet to use their heater.

"I haven't had an asthma attack here yet."

* www.housingfoundation.co.nz