Hi all,
Just want to get some views on this from today’s news (MX in Melbourne):
A radical plan to allow home buyers and their financial institution to share home ownership is being considered by the Federal Government.
Under the scheme, people would buy a share in a house through a mortgage rather than taking on the entire risk and cost of home of home ownership.
The remining share would be owned by the bank or financial institution.
When the property is sold, the home buyer and the bank would share in the profit or loss, effectively allowing families to hedge their exposure to any volatility in the real estate market.
The scheme also aims to bridge the gap between renting and buying, reduce up-front deposits and boost disposable income.
The plan is to be detailed in a report at the Liberal Party’s national convention in Adelaide this week.Cheers
CharlieHey Charlie,
Great pick-up and some really interesting information there.
Personally, I don’t think it will go ahead. There is too much potential for the system to be exploited by sharks out there. That means more risk for the bank and, as we can historically see from banks, more risk means more cost.
The benefits for the bank are potential capital gains. However, I’m certain that if the banks wanted to be property investors, they’d be property investors.
At least the government is seeing the fact that it’s getting harder and harder for people to buy their first home – especially in markets such as Sydney – so good on them for working towards a solution.
That’s just my 2.2 cents (GST inclusive)
Brent
This one has been on the drawing board for at least a year. I remember some press for this early-mid last year and people paniced then about the future of wraps. I am with Brent on this one. The bank may see potential profit in this but I don’t think they want to own property in such a way. As it is they have an interest in the properrty but this shared ownership would open up a whole heap of potential headaches when they are at present trying to reduce their problems by sacking staff all over the place. Who knows maybe it will occur but I don’t think it will change the market much as people dislike banks already.
Imagine the con men feeding off this deal. There would have to be some great angles to pick up on here. Who knows depending on how it works it may improve our investing potential….. woohoo.Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinMaybe some great opportunities could present themself as Andrew mentioned. Split equity loans, you could in effect ‘half wrap’ a property. Although there are many more issues to be sorted through on the topic! One to keep an eye on!
Cheers
Will
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