Real Estate Investor Magazine South Africa February 2014 | Page 29

FINANCE

BY MEYER DE WAAL

Buying Your First Home
Don’t let a lack of credit stop you

L

ast month we looked at how the Credit
Amnesty Bill would have far reaching
consequences if implemented, but who
will bear the brunt of this Bill most? The more
conservative lending practices already impacted
the ‘affordable home’ market, where properties
are sold to consumers who earn less than R18 000
per month. It is these future property buyers who
will be most affected by the Credit Amnesty Bill.
Is there anything that can be done to ensure that
the people most affected by this bill have a chance
to own a home?

Affordable housing and FLISP
Over the recent years many property developers
shifted their focus to the affordable home market,
as it appeared that initiatives like the Finance
Linked Individual Subsidy Plan (FLISP),
implemented by the national government, would
aid the process of housing delivery. FLISP,
however, was not able to meet the expectations, as
property developers (as an example) in the Western
Cape learned in June this year that the entire
2013-2014 FLISP budget was already allocated
and the Department of Human Settlements and
NHFC could not provide any statistics as to who
the beneficiaries of the FLISP subsidies were.
Developers are thus in the dark as to planning
their developments a year or two ahead, as they
are unsure whether sufficient FLISP funds will be
available to assist with their property sales.
The implementation of FLISP was further
hampered by the quality of the applications of
the consumers, as each FLISP applicant must
also comply with the lending criteria of the
banks or lending institutions, the three main
elements being affordability to service the
www.reimag.co.za

home loan, a good and healthy credit status
and profile as well as a deposit, the latter a
requirement by some lending institutions.

interested to talk to me when I am in distress as
a homeowner”.

New lenders in the affordable space, such as HIP
Bank and SA Home Loans recently entered the
affordable home loan market. These institutions
have funds available to allocate to home loans,
but are equally frustrated as the four other banks,
regarding the quality of home loan applications.
Lending institutions are eager to provide finance
to lenders in the affordable market and with the
current poor quality of applica ѥ