Housing Finance Subsidy Scheme operational |31 January 2014

First-time home buyers to get financial help

 Interest rate payable depending on financial institution rate

First-time home buyers will be able to get financial assistance through a subsidy which is paid to the financial institutions through which housing loans are taken.

This follows the announcement yesterday by the Ministry of Finance, Trade and Investment that the Housing Finance Subsidy Scheme, which was officially announced in the Budget 2014 address in the National Assembly in December last year, has now become operational.

Similar housing subsidy schemes are widely adopted in other countries as a way to reduce pressure on governments to provide affordable housing to their people.

The Housing Finance Subsidy Scheme will allow lower-to-middle-income applicant(s) to take housing loans which are all too often out of their reach. This is possible through a subsidy paid by the government of Seychelles on top of the maximum serviceable loan available for the applicant(s).

The subsidy will be a grant from the government to first-time home owners which means that it does not need to be paid back to government, unless in cases of foreclosure or sale of property within the first seven years of the loan agreement.

The maximum serviceable loan from which a household can benefit is generally determined as an amount whose monthly repayment does not exceed 40% of the household income.

As is the case when fiscal incentives are provided, the scheme will impact on the national budget. The Ministry of Finance, Trade and Investment has allocated a sum of R21 million for the Housing Finance Subsidy Scheme in the 2014 budget.

In order to be eligible for a subsidy, applicant(s) will have to meet the following criteria among others:

• They must have a personal contribution of at least 10% of the project cost;

• The income or combined income must be less than R20,000 per month;

• The applicant(s) must be Seychellois citizens who are gainfully employed or self-employed.

To apply for the subsidy the client(s) has to fill in the housing loan and subsidy application form at the financial institution.

The maximum repayment period will be over 20 years.