Housing in Southern Africa July 2016

Housing

Sourcing Flisp subsidies Many current new home owners are unaware that first time home buyers may qualify for a housing subsidy under the Finance Linked Individual Subsidy Plan (FLISP) grant.

A ccording to Meyer de Waal, CEO of Rent2Buy, “If newhome own- ers do not investigate andmake use of the opportunity, they could be losing thousands of rands by not claiming the FLISP subsidy, as well as reducing their bond repayment and bond term.” The government subsidy is aimed at assisting first time home owners to buy their own homes. It is available to home buyers who earn between R3 501 – R15 000 per month. This is provided that the home loan has been approved and newhome ownersmust apply for the assistance within 12 months of taking ownership. The minimum FLISP subsidy is R20 000 and if such subsidy is paid towards a bond of R500 000 as a ‘once- off’ payment, the home owners can save up to R100 000 and reduce his/ her bond repayment from 20 years to almost 18 years. This saving equates to two years of bond repayments. Similarly, a subsidy of R40 000 awarded to a qualifying home owner with an income of R11 700 per month, who may qualify for a home loan of R400 000 can save more than R170 000 on bond repayments. This will reduce the bond repayment term from 20 years to 15 ½ years. The maximum purchase price of R300 000 has changed since 1 April 2014, yet few existing home owners are aware of this opportunity to claim their FLISP subsidy. The FLISP subsidy also benefits the commercial banks as it reduces the debt risk for a bank, by reducing the loan to value ratio. “We suggest that clients approach their banks to recon- sider and reduce the interest rate that is applicable to a home loan, once the FLISP subsidy is paid into their home loan account,” says Vern Pugin, who made an intensive study of govern- ment assistance over the past few years and realised that home owners need to be assisted and informed about their rights to obtain FLISP sub-

Waal, who developed the Rent2Buy concept. Home ownership education forms a vital part of their educational module. With Rent2buy, aspiring home owners will first rent the home they want to buy, should they not meet the strict requirements of a mortgage from the commercial bank- ing sector. In the meantime potential home owners can secure the property with the Rent2Buy agreement. This will give them the time and opportu- nity to improve their credit rating and affordability, to save a deposit and enhance their chances to apply for a home loan, which can sometimes take between 12 to 18 months. Pugin says that such opportuni- ties will allow the processing of FLISP subsidy application to process much faster as by the end of the rent2buy period, all the required FLISP docu- mentation will be ready and available for processing. For more information go to www.flisp.co.za ■

sidies. This research has been shared at various workshops with property developers, estate agents, home buy- ers and home owners. FLISP subsidies are available to pre-qualified property developments and to obtain such approval, property developers need to submit their appli- cation in advance to the Department of Human Settlements. The FLISP subsidy is not limited to property developments only; the grant is available to the open market for all first time buyers as well. Any type of residential property can be bought, whether it is a plot and plan, a new house, or a property with an existing house on it, as long as the applicant has pre-qualified for a home loan, when submitting the application for the FLISP subsidy. Applicants will have to meet the qualifying criteria. Pugin realised that home owner- ship education plays a vital role in creating sustainable home owner- ship and teamed up with Meyer de

July 2016