Ministerial Response - Starter Home Deposit Loan Scheme - 16 April 2013

Findings

Comments

1

The proposed deposit loan scheme would  address  very  high  deposit requirements for prospective first- time buyers but would not address all  the  obstacles  which  they currently  face.  Other  measures from the Council of Ministers will therefore be required, particularly to increase housing supply.

As the Panel has noted, the Deposit Loan Scheme will address the specific obstacle of high deposits, but further measures are required if we are to achieve our Strategic Plan objective of ensuring that Islanders are adequately  housed,  for  example,  with reference to supply (noting the issues with the housing waiting list and arising from the Housing Needs Survey); in relation to social  rented  housing  (which  is  why  the Housing  Transformation  Programme  is essential); and in relation to complimentary affordable  housing  products  (to  be developed,  subject  to  approval,  by  the Strategic Housing Unit).

2

The  principle  of  the  scheme  has been broadly welcomed, although some  concerns  have  been expressed as to whether it would represent a justified use of public money.  Ultimately,  the acceptability  of  the  scheme depends  on  the  details  of  its structure and operation.

It is pleasing that the evidence given to the Panel was such that the principles of the scheme  were  "welcomed",  and  it  is recognised that the details and structure of the scheme are essential.

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3

The  value  of  the  scheme  is potentially  limited  from  the borrower's perspective. Borrowers would  gain  greater  initial advantages  if,  for  example,  the scheme  instead  comprised  an equity-based loan with no interest payments for five years.

As  noted  by  the  Panel,  the  scheme addresses  the  specific  obstacle  of  high deposits.  It  also  provides  some  modest improvements  in  affordability.  As  to alternatives, such as an equity-based loan scheme, this is a very different proposition to a repayment loan scheme, and generally means (i) the money lent by the States is not actually repaid except in the event of sale; and (ii) that any decrease in price is a risk  borne  by  the  States.  This  involves additional complexity and risk, and defers replenishment  of  the  scheme  and  its consequent  ability  to  be  extended.  While there  is  a  place  for  shared  ownership models, this scheme is a modest pilot on the simple principle that the States lend the money  to  householders  who  have themselves saved, but struggle to raise the full deposit, with reasonable assurance that the monies lent can actually be repaid.

4

The scheme has been designed for Jersey.  It  is  not  clear,  however, what evaluation was undertaken of similar  schemes  in  operation elsewhere  and  whether  any alternatives to the proposed criteria (for instance, a guarantee scheme) were considered.

The deposit loan scheme is a pilot project that has been modelled on similar schemes operated elsewhere, but tailored to Jersey's housing  need;  and  having  considered alternative schemes in operation elsewhere (including those mentioned in the Report of the Panel), and having reviewed schemes in the  United  Kingdom,  including  the devolved  jurisdictions  and  at  local government,  and  elsewhere  in  the  world, where indeed, a range of schemes co-exist. The notable types of scheme to address the issue of high deposit costs, however, fall broadly into one of either:

1. deposit loans, as proposed in Jersey;

2. equity-based schemes, as discussed above; or

3. guarantee schemes, which:

• rely  on  lenders  to  accept  the guarantee  and  be  prepared  to lend  a  higher  loan-to-value, with  this  not  finding  initial favour with lenders;

• would take longer to introduce as  they  cannot  build  on  the procedures  of  the  established

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States  Loan  Schemes,  or readily  fit  within  the  existing legal provisions that govern the granting of loans.

Following  completion  of  the  pilot,  its results  can  be  assessed,  and  indeed,  the results  of  other  schemes  in  operation elsewhere  can  be  continued  to  be monitored. This could mean, as elsewhere, other  products  and  schemes  could  be introduced.

5

It is not clear what alternatives to an 80% mortgage/15% loan split, if any,  were  considered.  Given  that there  are  currently  five  90% mortgages and one 100% mortgage available on the market, alternative arrangements might be feasible.

All mortgage lenders confirmed that there were assorted mortgages available subject to a range of lender criteria. It is known there  are  90% – 100%  mortgages  in  the local market, but these are not the norm; and  naturally,  these  mortgages  require levels of equity, income, or security which the  cohort  of  households  targeted  by  the scheme will likely lack. The 80% mortgage was considered after due consideration to the advice given by mortgage lenders and with reference to products in the market. The  5%  element  contributed  by  the householder  was  a  policy  decision  that savers should be obliged to contribute part of the deposit such that the scheme would be accessible to householders who, in the generality, had saved.

6

A  formal  report  with  economic advice  was  not  requested  by  the Ministers.  Advice  considered  by the  Ministers,  albeit  informally, indicated  that  there  were  risks associated  with  the  proposed scheme, including in respect of the market  impact;  the  behaviour  of borrowers  and  mortgage  lenders; and  whether the  proposals  would constitute the best use of funds.

The  Economic  Adviser  supports  the development  of  policy  in  a  number  of ways, in particular, the Economic Adviser is a part of the Central Policy Unit of the Chief Minister's Department, upon whose advice,  amongst  others,  the  Minister  for Treasury and Resources relied upon in the development of the Scheme. Furthermore, and  in  addition,  the  Economic  Adviser attended a meeting of Ministers to provide advice  and  guidance,  and  subsequently reflected this in writing. In doing all this, the  Economic  Adviser  understandably raised risks associated with prices and the behaviour of lenders, and these risks have accordingly  and  appropriately  been mitigated in the parameters of the scheme. For  example:  (i) the  narrow  eligibility criteria  with  reference  to  income  and

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property prices (use of the lower quartile) (also  see  Finding 20  below);  (ii) the limitation  on  funds  available;  (iii) the partnership arrangements being entered into with  lenders  and  associated  procedures, including the inability to tier products (also see  Finding 11  below);  and  (iv) the monitoring  of  the  project  as  a  pilot initiative  following  which  a  detailed assessment  will  be  made  and  reported upon.

7

The Council of Ministers did not discuss the draft proposition for a Starter  Home  Deposit  Loan Scheme, contrary to the principles of the States of Jersey Law 2005 and  the  Council's  own  agreed policy.  The  Council  did  not therefore have a full opportunity to discuss the proposals, a matter of concern  given  that  one  Minister had  reservations  regarding  the proposals.

The States of Jersey Law 2005 establishes the Council of Ministers to, among other things, co-ordinate the policies for which Ministers  are  responsible,  and  to  discuss and  agree  policies  for  which  2  or  more Ministers  are  responsible.  The  Code  of Conduct  for  Ministers  thereon  indicates that  if  a  Minister  wishes  to  bring  a proposition  to  the  Assembly  that  affects another Minister, they should discuss that proposition with the other Minister, and if they are in agreement, the matter can then go forward. The Ministers for Treasury and Resources  and  Housing  worked  closely together in the development of the scheme, in consultation with the Chief Minister, and thereon,  circulated  the  proposals  to  the Council  of  Ministers  for  comment, recognising the importance of delivering on the proposal.

8

The  criteria  presented  in  the proposition  do  not  appear  to prevent  households  from subsequently letting their property to a third party.

The ability to let properties to third parties will be prevented, and made explicit in the scheme rules. In doing this, some limited exceptions  will  be  included  in  the  rules, with  reference  to  necessary  overseas medical  treatment  and  limited  periods  of overseas secondment (not to exceed 2 years (to align with the treatment around housing qualifications  adopted  by  the  Population Office)).  These  seem  reasonable  and limited  exceptions  reflecting  the  natural and understandable personal circumstances that families can face, while prevent letting to third parties in other circumstances.

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9

There  remain  unanswered questions  regarding  the  operation of  the  proposed  deposit  loan scheme  which  need  to  be addressed  before  the  States Assembly is asked to approve the proposition.  The  need  to  finalise some  details  was  acknowledged during our review.

There  clearly  is  a  balance  to  be  struck between developing a policy and providing details around its operation such that the Assembly are satisfied as to its adequacy and  appropriateness,  and  the  requirement that  the  Assembly  provide  in principle' support  and  direction  prior  to  the finalisation  of  arrangements,  including contractual  matters.  In  the  case  of  this scheme, advanced work has taken place by Officers of the Treasury and Resources and Chief  Minister's  Departments,  in consultation  with  external  parties  and internal legal advisers, such that processes and procedures, roles and responsibilities, scheme rules, and legal arrangements, are developed.  These  matters  will  then  be finalised,  including  contractual arrangements with primary lenders, subject to  States  approval,  and  within  the constraints  of  appropriate  controls  and governance structures.

10

There  is  a  risk  that  mortgage lenders would be more relaxed in respect  of  due  diligence  of  the States' 15% loan than in respect of the 80% mortgage.

The  States  will  work  in partnership  with lenders to achieve success, and contractual relationships will be established with those lenders such that those lenders do not have ability, or incentive, to relax due diligence requirements;  for  example,  that  debt collection  and  related  procedures  are triggered should the loan repayments fall behind in respect of any portion of the 95% lending, i.e. the lending of both the primary lender  and  the  States  of  Jersey  will  be subject to the same arrangements. This will take  place  alongside  internal  procedures applied by the Officers of the Treasury and Resources  and  Chief  Minister's Departments  in  assessing  applications.  In summary,  the  issue  is  recognised,  is understood, and mechanisms to address the risk have been considered, and mitigation will  be  enshrined  with the  scheme  rules, procedures, policies and arrangements.

11

It  is  the  Ministers'  intention  to establish a partnership arrangement with  participating  mortgage lenders.  The  proposed  scheme would  only  be  feasible  with  the

See comment above, and in particular, the rates  and  products  available  to  persons under the scheme will be no different from those  available  to  persons  outside  the scheme, i.e. lenders will not be permitted to

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willing and active involvement of mortgage lenders. It is imperative that implementation of the scheme would  not  lead  to  changes  in lending behaviour by participating institutions.

tier their products such that persons under the scheme are on different rates or terms (other than by virtue of the scheme rules themselves, e.g. the requirement to repay the interest subsidy in the event of onward sale with sufficient profit to make such a repayment).

12

Under  the  proposed  criteria,  it would  be  possible  for  some households to have purchased and owned a property and yet remain eligible for the scheme. The Panel does not believe that current first- time buyer rules should be applied as the scheme would otherwise not be  guaranteed  to  help  those  in greatest need of assistance.

The  existing  rules  applied  by  the Population  Office  in  respect  of  first-time buyers exist for a reason that it is natural and  understandable,  notably,  that  persons who have gained an initial footing on the property ladder by way of a flat, and who want to move up the ladder in the event, for example, of having or planning a family, are placed in the same position as another couple who have rented, whether privately or  in  social  housing,  or  lived  at  home. Indeed, it is difficult to see why the latter group of individuals are in more need than the former.

13

The  proposed  criteria  for  liquid assets stem from similar provisions within Income Support legislation. The  Panel  does  not  believe  it would  be  appropriate  to  allow eligible  households  to  retain  the level of liquid assets described in the proposition.

Ministers  decided  to  link  savings  to  the Income Support legislation as the level of those sums were seen to be appropriate for those claiming Income Support. Indeed, the asset  cap  is  needed  to  recognise  that:

(i) if  the  States  are  lending  money,  they should only do so to persons who need that money, but that: (ii) people moving home will  naturally  and  often  have  modest expenses,  in  particular,  at  the  lower quartile,  where  properties  may  need redecorating or some investment, and that having  a  lower  asset  cap  will effectively mean  such  persons  move  into  properties without any ability to do this. Indeed, at a policy  level,  it  is  difficult  to  understand why  a  person  should  be  able  to  claim Income Support with one level of assets, but an aspiring home-owner with the same level of assets (after their 5% deposit and having paid fees and expenses) should not be able to have the same level of assets.

14

An analysis by the Statistics Unit shows  that  1,369 households would  potentially  be  eligible  for the proposed deposit loan scheme. A  policy  decision  was  taken  to

The  statistical  analysis  provided  by  the Statistics  Unit  showed  the  potential numbers  eligible  under  the  income  and property criteria used,  if all such persons were all so minded to purchase a property

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limit eligibility to the households amongst those 1,369 on the lowest incomes.  The  Ministers  have estimated  that  between  60  and 100 households  could  be  assisted during the trial.

during  the  life  of  the  scheme.  This,  of course, is not the case, as these individuals face  a  wide  variety  of  personal circumstances,  and  the  Statistics  Unit cannot with a reasonable accuracy estimate the  effects  of  these  variety  of  personal circumstances with reference to how many people  will  actually  purchase  under  the scheme.  However,  it  is  proper  that  a limitation is placed on the project in terms of available funds, and by way of it being a pilot project that can then be assessed.

15

The proposed scheme would target those  eligible  households  on  the lowest  incomes.  This  raises  the question  of  whether  the  scheme would encourage such households to take on debts which they would subsequently struggle to pay off.

Assessments of affordability and ability to repay under this scheme will be made by the lenders (and verified by the States) in the same way as they assess and make their normal  lending  decisions.  In  short,  the ability to repay a loan under the scheme will  be  equivalent  to  any  other  person accessing mortgage finance.

16

An  analysis  has  yet  to  be undertaken to determine how many of  the  households  which  would potentially  be  eligible  for  the proposed  scheme  are  planning  to move.

See response to Finding 14 above.

17

Announcement  of  the  proposed scheme  is  likely  to  have  raised expectations  which  could  not  be met.

Islanders  have  indicated  repeatedly  the importance  of  housing,  and  a  desire  for home  ownership.  Naturally,  any  scheme will  then  be  welcome  while  also  raising expectations.  However,  this  is  a  pilot scheme,  with  accordingly  prudent eligibility criteria. Overall though, the fact that  Islanders  will  welcome  the  scheme, and  that  it  may  be  over-prescribed  as  a result, does not in itself seem a reason not to proceed; on the contrary, it means that the scheme is needed, that it is appropriate for  it  to  be  a  pilot  scheme,  and  that communications and confirmations need to be clear.

18

It is unclear how access to the pilot scheme would be controlled fairly, given that up to 100 loans would be  available  but  that  there  are potentially  many  more  eligible households.  Applications  to  the

The scheme will have robust procedures in place before commencement as to receipt and  processing  of  applications,  and issuance  of  loans,  including  as  to governance and monitoring, based on the existing financial rules based on Financial

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scheme  would  be  processed through Band 5 of the Affordable Housing  Gateway  and  the Ministers  have  advised  that  the scheme  would  effectively  operate on a first come, first served' basis. With some 163 households already on  Band 5,  problems  with equitable  access  to  the  scheme could  arise  and  the  trial  period would  therefore  need  to  be managed efficiently to ensure that households did not apply and enter the  assessment  process,  only  to discover that the funding had run out and that their application could not be met, even if eligible.

Directions. However, it is the case that the scheme  will  be  on  a  "first  come,  first served" basis, as it is difficult to see any other  way  to  run  a  loan  scheme  that  is contingent  on  a  person  identifying  a property, saving their own 5% deposit, and securing lending from the primary lender. As to the limitation on funding, it is only proper  and  natural  that  this  limitation exists, in particular, for a pilot project. The purpose and limitations of the scheme will need  to  be  clearly  communicated  to applicants,  including  in  relation  to  any confirmation  of  acceptance  of  eligibility. As pointed out, this is a pilot project, and these  matters  can  be  further  considered during  the  life  of  the  project  and  with reference to any extension.

19

The exclusion of major new-build properties from the scheme would mean  that  houses  built  on  sites such as the former Jersey College for  Girls  would  not  be  eligible. This raises the question of whether the  proposals  display  joined  up thinking'  with  other  government measures.

The  development  on  the  former  Jersey College for Girls site will be delivered after the pilot life of the scheme. On the broader policy question, having given consideration to the issues, the proposition is clear that Loans cannot be obtained for major new build developments so as not to discourage developers  from  offering  new  purchase discounts,  and  this  seems  a  wholly reasonable  premise;  in  particular,  noting that  the  development  market  has  some participants with a sizeable market share. However,  some  very  small  private developments  will  be  permitted,  notably, small  conversions  of  a  single  house  into 5 or less multiple occupancy units, or the development of 2 or less new standalone properties.

20

In  2011,  140 flats  (and  no  two- bedroom houses) were sold at or below the lower quartile price. The likelihood is that the scheme would predominantly  apply  to  one-  and two-bedroom  flats,  of  which  the majority  would  be  share  transfer properties.  Given  that  the  new scheme would not apply to major new-build  properties,  the  scheme would  force  new  applicants  into the  market  for  existing  one-  and two-bedroom flats and there would

The eligibility criteria for the scheme have been  narrowly  defined  to  focus  on  the lower quartile of the market, and in doing this, it is likely that some sellers will price their  properties  below  the  lower  quartile threshold, or purchasers will make offers below the lower quartile threshold, in order to  qualify  for the scheme,  i.e. as  well  as inserting  some  additional  demand,  the scheme  may  also  have  deflationary consequences  in  order  to  satisfy  the requirements of the scheme. In addition, the persons  helped  by  the  scheme  may  be

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be a risk of distorting that part of the market.

vacating units which could then be sold, or increase the supply of rental stock, i.e. the net supply and demand effect a move could be nil, suggesting the net overall effect on prices and rents will be nil. The extent of these competing factors on price and rents will be closely monitored during the life of the  scheme.  Certainly,  however,  the property market has been in a prolonged period  of  limited  activity  and  marginally declining  prices,  with  a  large  supply  of properties. In these circumstances, having considered in depth the implications, it is difficult  to  see  a  limited  scheme  of  this nature having a material effect.

21

The  affordability  of  flats  has improved. If more households are able to purchase a flat, the question is  raised  of  whether  States assistance in the market is required at this time.

It  remains  the  case  that  deposits  on properties, including in relation to flats, are relatively  sizeable,  given  prices  and predominant  lending  criteria,  and  indeed, the  Statistics  Units  web-page  is  clear  in outlining that:

"the mean prices of 1- and 2-bedroom flats  and  of  2-bedroom  houses  were slightly higher in 2012 than in 2011"

22

The  States  would  take  a  second charge  on  the  properties  falling under  the  scheme.  The  Panel understands that the security of the States'  interest  can  be  obtained, including  on  share  transfer properties.  However,  there  is significant  uncertainty  as  to whether practical arrangements for this  to  occur  in  respect  of  share transfer  properties  have  been confirmed with mortgage lenders.

The Panel have outlined in their report that they  understand  that  there  would  be  no difficulty in obtaining satisfactory security. This  is  also  the  view  taken  in  the development  of  the  scheme  following appropriate engagement with legal advisors and partnership lenders.

23

There would be risks to the States' interest  in  the  event  that  a participating  household  defaulted on  its  repayments.  That  risk  has been  recognised  by  the Ministers but it remains unclear as to how the risk would be mitigated. There is  the  possibility  that  the  States could  be  left  as  an  unsecured lender.

The States has a long record of lending to assist  house  purchase  through  the Dwellings House Loan Fund. The Deposit Loan scheme will not be dissimilar in its operation, in that it will lend money after having  made  an  assessment  of  ability  to repay. There will proper financial oversight by  the  States  Treasury  and  a  partnership arrangement with lenders which will have early warning alerts in the process should any borrower get into financial difficulties.

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Furthermore,  as  outlined  above,  proper assessment  of  ability  to  repay  will  be undertaken  at  the  outset,  and  security obtained.  In  this  context,  and  based  on experience, the risks are therefore limited.

24

Further information is required on what  would  happen  if  a participating  household  sold  their property before the 20 year term of the  loan  had  elapsed.  Such information  also  needs  to  be clearly  provided  to  applicants  of the  scheme  at  the  time  of  their application.

The  requirement  to  repay  the  interest discount accrued over the life of the loan (being  the  difference  between  the  0% applied  to  the  loan  and  the  prevailing market rate applied by the primary lender on the 80% main mortgage) would be due should a property be sold before the 20 year term of the loan, up to the extent that there was  profit  on  the  sale  to  meet  that repayment. This information will be clearly outlined in the communications, including confirmations  of  eligibility  provided  to applicants.  It  should  also  be  pointed  out that  this  requirement  to  repay  interest discount  already  exists  in  relation  to  the Dwelling  Houses  Loan  Scheme,  and  has operated in this way for many years.

25

The Ministers for Housing and for Treasury  and  Resources  have stated that they would not seek to exercise  ministerial  discretion  in the operation of the scheme.

The discretion proposed in the proposition related primarily to the treatment of new developments. However, the Ministers have made their position clear at the Panel, and instead, this will be a matter for the scheme rules with reference to Finding 19 above.

26

It is unclear what impact, if any, the implementation of the deposit loan  scheme  would  have  on  the overall housing market. However, the greatest risk is that the impact would be felt most keenly in the market for one- and two-bedroom flats.

See Response to Finding 20 above.

27

There are risks that implementation of the scheme would alter people's behaviour  and  thereby  make  it more  difficult  for  the  scheme  to reach  those  households  most genuinely  in  need  of  assistance. For instance, it is unclear how the proposed  scheme  would  avoid providing assistance to households who  at  present  could  receive parental help.

The Finding is noted, but the implication appears  to  be  that  persons  should  be ineligible to access the scheme where their parents,  or  indeed,  other  close  relatives, have  sufficient  assets  to  provide  the deposit. This is not considered a viable or appropriate rule.

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Comments

28

The  Panel  was  advised  by  the Minister  for  Housing  that  the impact  of  the  scheme  would become apparent once it had been introduced.  Monitoring  of  the deposit  loan  scheme  is  vital although  not  all  problems  may become  apparent  during  the  trial period.  Such  monitoring  should take  into  account  the  impact  on people's  behaviour;  whether  the scheme  assists  those  who  truly would not have been able to buy without  assistance;  whether  any market  effects  can  be distinguished;  whether  there  is oversubscription;  and  whether  an extended  scheme  should  cover purchases  in  the  social  housing sector.

Noted and agreed.

29

Some  funds  remain  within  the Dwelling-Houses Loan Fund for a possible, limited extension of the trial  scheme.  The  Minister  for Treasury  and  Resources  has indicated that consideration would be  given  to  alternative  funding sources,  although  he  has  also indicated that, even if implemented and  additional  funds  made available,  it  is  unlikely  that  the deposit  scheme  would  be maintained in the long term.

Noted and agreed.

30

If households were required to pay a degree of interest on the States' loan, or if the States were able to share  in  any  uplift  once  the property  were  sold,  funds  for  a potential extension of the scheme would be replenished.

As  outlined  in  Finding 24,  interest  is recoverable at the point of sale in the event of  sufficient  profits  being  made.  In  the meantime, the repayments of the principal monies  lent  will  take  place,  thus replenishing the scheme (as contrasted with an equity-based scheme). Having said this, the rules  of  the  scheme  will be  assessed during the life of the pilot, and could be changed in any extended scheme.

Findings

Comments

31

Whilst  the  proposed  deposit  loan scheme fits strategic objectives and seeks  to  address  one  of  the obstacles  currently  facing prospective first-time buyers, more clarity  and  detail  are  required about  how  the  scheme  would operate.  Until  that  clarity  is obtained and outstanding issues are resolved, the Panel cannot support the proposals.

The  above  responses  are  intended  to provide  the  responses  requested  by  the Panel.

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

1

The  Minister  for  Treasury  and Resources should report to the States Assembly  ahead  of  the  debate  on P.131/2012  on  what  alternatives,  if any, were considered to the proposed deposit loan scheme.

T&R

Accept

See Response to Findings 3 and 4 above.

Immediate

2

The  Council  of  Ministers  should ensure that, for any future ministerial proposition lodged for debate by the States  Assembly,  a  statement  is included in the accompanying report to indicate when the Council noted or discussed the proposition at a formal meeting.

CoM

This is a matter for the Council of Ministers to consider.

2013

3

Prior to the debate on P.131/2012, the Minister for Treasury and Resources should  clarify  whether  the  proposed scheme  would  prevent  buy-to-let' situations arising.

T&R

Accept

See Response to Finding 8 above.

Immediate

4

Prior  to  any  implementation  of  the scheme, the Minister for Treasury and Resources should revise the eligibility criteria  to  ensure  that  households already  in  possession  of  a  property (whether  freehold  or  share  transfer) would  not  be  eligible  for  a  deposit loan.

T&R

Reject

See Response to Finding 12 above.

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

5

The  Minister  for  Treasury  and Resources  should  re-examine  the appropriateness  of  the  eligibility criteria in respect of liquid assets.

T&R

Reject

See Response to Finding 13 above.

6

Prior to the debate on P.131/2012, the Minister for Treasury and Resources should  confirm  how  access  to  the scheme  would  be  managed  and explain  how  the  situation  would  be avoided  that  households  enter  the scheme  only  to  discover  that  the funding had run out.

T&R

Accept

See Response to Finding 18 above.

Immediate

7

The  Minister  for  Treasury  and Resources  should  amend  the eligibility  criteria for  the scheme  to ensure  that  all  new-build  properties would be eligible.

T&R

Reject

See Response to Finding 19 above.

8

Prior to the debate on P.131/2012, the Minister for Treasury and Resources should  clarify  what  practical arrangements have been put in place to  ensure  that  the  security  of  the States  interest  in  respect  of  share transfer properties has been obtained.

T&R

Accept

See Response to Finding 22 above.

Immediate

9

The  Minister  for  Treasury  and Resources  should  confirm  what would happen in respect of the States' interest  in  the  event  that  a participating  household defaulted  on the repayments of their loan.

T&R

Accept

See Response to Finding 23 above.

Immediate

10

The  Minister  for  Treasury  and Resources should clarify what would happen  in  the  event  that  a participating  household  sold  their property  before  the  20 year  term  of the loan had relapsed.

T&R

Accept

See Response to Finding 24 above.

Immediate

11

The  Minister  for  Treasury  and Resources  should  re-visit  whether interest  should  be  charged  on  the loans provided under the scheme.

T&R

Reject

See Response to Finding 30 above.