Premier Paul Davis announced the two-year pilot project Thursday afternoon in St. John’s, saying economic prosperity in Newfoundland and Labrador is raising the cost of housing, making it more difficult for people with low-to-moderate incomes to buy a home.
“Affordable home ownership is an investment in our future. It’s an investment in a family’s future. But there is perhaps no greater challenge in achieving home ownership than coming up with that much-needed and required down payment,” said Davis, announcing the program, which will cost $2.5 million and which the government estimates will garner 100 to 125 applicants a year. “And because of that, many households are paying rents that exceed what a mortgage payment would be for a moderately priced home, and we want to change that.”
But NDP housing critic Gerry Rogers slammed the timing of the program, which Davis said will start accepting applicants almost immediately, just over a month before a provincial election.
“I don’t know whether to celebrate or be absolutely outraged. This program was promised, promised by this government, four years ago,” she said after the announcement. “It’s been four years of false promises.”
The cost of housing has risen substantially in the past four years, said Rogers. “Imagine if this program was in place when they promised for it to be in place, how many families it could have helped. We’ve lost those four years, needlessly,” she said. “This is a hail Mary from a government that’s dying. … the people of Newfoundland and Labrador are not stupid, and their votes will not be bought.”
That said, Rogers said the particulars of the program look good, apart from the maximum purchase prices — $250,000 in the St. John’s area, $200,000 in regional centres of Clarenville, Gander, Grand Falls-Windsor, Corner Brook and Stephenville, and $175,000 in the rest of the province.
Applicants must have a total household income of less than $65,000 to qualify for a full loan, which amounts to up to five per cent of the price of the house. Households with incomes between $65,000 and $75,000 will qualify on a sliding scale for less than the full amount. Repayment will begin five years after the loan is made.
Realtor John Riche, who attended the announcement, said the program will help a lot of people, and not just the home buyers. Those home buyers will help free up rental inventory in tight markets, he noted.
“There’s always been that lower-income level that just can’t do it, because there’s just not enough money, not enough income. They don’t meet the ratios from the mortgage brokers, so it’s going to help us a lot,” he said. “The real benefit, however, is the ripple effect it’s going to cause in the industry — those people who are going from apartments into this program, buying new houses, those people who own those houses, they’re going to be stepping up a notch and you’re going to see a ripple effect that’ll go through the real-estate market.”
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