Auckland Council’s Finance and Performance Committee has given the green light to divesting its equity share in the Own-your-own home scheme.
Chair of the council’s Finance and Performance Committee, Councillor Desley Simpson says the council’s divesting of its equity share will not have any day-to-day effect for any of the current owner-occupiers.
“All homeowners will be able to remain in their home with the assurance that all existing contractual obligations will remain until the homeowner no longer requires their unit.
“Any new purchaser will need to uphold the original intent of the scheme for those existing homeowners. They need to be committed to making sure any new residents are compatible with older people and maintain the existing peace and quiet currently experienced in the villages.
“Along with continued management obligations, we expect any purchaser to buy any unoccupied units, our equity stake and buy-back right for the owned units.
“The decision to divest our equity share in the scheme has not been taken lightly. There is an enormous amount of work that needs to be done to identify a socially minded organisation with the experience and capability to uphold the original intent of the scheme.
“We want to assure anyone who currently owns their own unit that this process will not have any day-to-day effect on them. As homeowners legally own the title of the unit, they will be able to remain in their home with the assurance that all existing contractual obligations will remain, until the time they decide they no longer require their unit.”
The scheme is a shared equity home ownership plan for older people (over 65) established in the 1970s by legacy councils and allows eligible persons to buy a residential unit from Auckland Council at an agreed percentage of its market value. The council retains an agreed stake, and if the homeowner decides they no longer require the unit, they must sell back to the council at the agreed percentage of its market value.
Auckland Council General Manager Value for Money, Ross Chirnside says after a thorough assessment of the scheme, the council believes it is no longer fit for purpose.
“Auckland’s housing needs have changed substantially since the 1970s. New retirement homes and villages are more appealing, both financially and from a quality-of-life perspective, through rest home care, property and ground maintenance and social activities.
“Not enough eligible older Aucklanders are showing interest in the units available through the scheme – over a third of the units are now empty and have been for some time. There have been few purchases over the last three years and overall ownership rates continue to fall.
“With just 150 units of differing ages and styles spread across 14 villages, the scheme limits our ability to have a wider positive impact on housing for older people.
“We also have an obligation to provide value for money services to Aucklanders, and the scheme is not the best use of ratepayer money. It primarily benefits a relatively small number of private homeowners and is not best suited to the needs of older Aucklanders, when compared to other retirement village options.
“We are also facing significant refurbishment costs to bring the vacant units up to today’s standard. Ordinarily the required refurbishments would be funded via the proceeds of units being sold, but due to the drop off in demand for these, this has not been sustainable.”
Sales of the units under the Own-your-own home scheme have been stopped while this process is carried out.
All homeowners have been sent letters to let them know that council’s plans to divest of this scheme will not affect their ownership and that this process will take some time.
Representatives will meet with all homeowners in person once we have further information to share and to outline the next steps.