Government Home Buying Scheme Fails for Buyer Amidst Setbacks

Erin Bell's six-month quest to buy a home through a government scheme kept failing — not least because she had a boyfriend. The 32-year-old could only afford her first home if she let the government own a share of it. Under the MyHome scheme, the Tasmanian government contributes up to 30 per cent of the cost of an existing home, or 40 per cent of a new home. The government's share must be paid out within 30 years — at the property's current market value. Between March and August, Ms Bell went through the application process three times. Ms Bell said the relationship was still fresh when the scheme's lender, Bank of us, told her she would be required to list her boyfriend of five months on the application. Ms Bell said she left the bank in tears and contacted the administrator of the scheme — a government body, Homes Tasmania — the next day: "I disagree with being told I'm not eligible for assistance as a 'single' due to having a boyfriend for just over five months," she wrote. "The property is for myself and for me to have independence and potential future and hopefully a family some day in the way distant future. "To be told I would not be able to proceed based off this information was devastating." She did not receive a response from Homes Tasmania but, days later, Bank of us reinstated her as a single applicant. Inflated offer for defect-riddled house falls through To ensure the scheme supports those who cannot afford a home otherwise, an income test is applied — although some first-home buyers are exempt from it. Bank of us had approved Ms Bell for a $440,000 home, but properties in Hobart in that price range were hard to come by. By September last year, there had been 67 sales under that price mark, comprising 4.4 per cent of all sales, the Real Estate Institute of Tasmania said. Adding further difficulty, the scheme's processing time of about 90 days seemed to "deter" sellers. Ms Bell told Bank of us that a vendor had asked that she increase her offer, arguing she was "high risk" because the approval to purchase had to be granted by both a government agency and a financial lender. But Ms Bell withdrew the offer when the property returned with structural issues so grave that she was sure it would not meet Homes Tasmania's requirement of a satisfactory building inspection report. 'Home couldn't be built for $195k': builder slams bank's valuation Unable to make inroads, Ms Bell pivoted to building a new home. Construction company Creative Homes Hobart had given her a $506,000 quote for a house and land package in Rokeby on the eastern shore. After Ms Bell had paid the business the $3,000 non-refundable deposit, Bank of us organised an independent valuer to carry out an assessment. The report came back as "not satisfactory", with the property valued $31,000 cheaper. "I just didn't think that it made sense at all because the value is only going to increase on the property. It's in an up-and-coming area," Ms Bell told the ABC. Creative Homes Hobart held the same view, telling Ms Bell in an email: "The valuer has come up with a ridiculous valuation," it wrote. "Your home couldn't even be built at cost price for the $195,000 they have valued the property at. "Especially considering all the MyHome extra[s] required as part of the build." When the company offered it could take $20,000 off the land and construction price, Bank of us said that a new valuation would have to be carried out but the valuer had "not indicated that the proposed changes will have a positive impact". The valuer told the ABC its Tasmanian team assessed more than 10,000 properties a year, applying industry-standard methodology. It said market value was determined using a direct comparison approach to recent sales or similar properties, and took into account design and land and dwelling size, among other factors. "Any proposed changes to a contract price, with no change to the property itself, will on that basis not alter the market value of the property as the assessment is based on market evidence and property specifications," it said. After six months of trying every which way, Bank of us suggested to Ms Bell that "there is still the option for you to find an established home". But Ms Bell had given up, telling the ABC she did not believe the scheme worked. Creative Homes Hobart director Greg Rothacker told the ABC that despite ample interest, most enquiries he had received from MyHome customers did not advance. Homes Tasmania and Bank of us could not comment on Ms Bell's efforts to use the scheme due to privacy constraints. "Every loan application, including MyHome, is subject to a rigorous assessment to ensure our customers are well placed to qualify under the program and service the loan," Bank of us head of lending Phil Kitto said. "Bank of us only works with consultants with a demonstrable track record, and we have every confidence in our valuer partners." Homes Tasmania said APRA regulated lending and Bank of us managed the application process, which included assessing household income limits based on the number of adults and children. Hundreds of success stories, Homes Tasmania says Housing Industry Association (HIA) said while the MyHome program had been "a really strong contributor" to housing affordability, implementation needed improvement. "Our members at the HIA have frequently raised concerns about lengthy approval times and unrealistic valuations for MyHome builds," Tasmanian director Benjamin Price said. "Addressing these barriers is really critical to keeping this program a success." Bank of us and Homes Tasmania have defended the longer processing time of the scheme, with the latter saying it helped buyers "better understand their purchase". "Homes Tasmania reinvests the funds received into delivering more social and affordable homes." By late November, 956 properties had been purchased through the scheme — 624 of them existing homes. Bank of us has exclusive rights to lend through the scheme. At 6.11 per cent, the variable interest rate for MyHome is higher than for other home loans the bank offers. Last month, Bank of us told the ABC it had introduced a 0.35 per cent discount to interest rates following customer feedback. Clients who have established "a solid repayment history" start receiving the reduction at the three-year anniversary of moving into their home, the bank said.