Building Company suggesting a way FHBs can get onto ladder

[donna]

Hi All,

I found this an interesting "Press Release" on how homebuyers may be able to get a property by taking in flatmates - and the home builders Generation Homes see it as a sales strategy - i.e., buy a bigger home 3 or 4 beds maybe with an additional bathroom and sitting room and pay for it by taking in flatmates. It is a big win for the developer who wants to sell bigger homes on less land, and it could work for first-home buyers, too.

My first thoughts are -

1. Would Banks consider 'flatmate' contributions as income for servicing? If so, how much of it is 30% or more?

2. Would the new homebuyer need a legal agreement with the flatmates?

3. Do homebuyers of new builds who take in flatmates get interest deductibility?

This is a really interesting one, as it appears there's no requirement to have a flatmate agreement - more that it is encouraged. Plus, I think it's an honesty thing with the IRD - let them know you've got a flatmate or two if you want to.

The IRD says it wants its share — at the homebuyer's personal tax rate or the tax rate of the entity buying the home - but how is that enforced?

Of course, the PR does not mention the IRD payment requirement.

Are there mortgage brokers across this with lenders, and what's been the experience so far?

regards,

Donna

[hawkeye]

That’s not new. I did that in the 90s!

[donna]

^^ I guess you're referring to having a flatmate in the home you bought. Many of us have done that.

However, did you use the flatmate arrangement to get your lender to increase your mortgage before you bought your home?

Has anyone done this? Plus have answers to my questions

1. Would Banks consider 'flatmate' contributions as income for servicing? If so, how much of it is 30% or more?

2. Would the new homebuyer need a legal agreement with the flatmates?

3. Do homebuyers of new builds who take in flatmates get interest deductibility?

Thanks

Donna