❓ Hon Steve Martin questions the Housing portfolio regarding the increase of the loan-to-value ratio (LVR) cap for community housing providers, focusing on compliance, justification, and potential impact. The government defends the increase as a sector-requested measure to boost social and affordable housing supply, citing consultation with WA Treasury Corporation and the sector.
AnsweredQoN 2107Legislative Council
QuestionView source ↗
I refer to the McGowan Government increasing the loan-to-value ratio (LVR) cap for providers operating under a Community Housing Agreement with the Department of Communities, and I ask: (a) does the State Government keep a record of community housing provider loans in order to verify compliance with the LVR cap; (b) if no to (a), how is this otherwise achieved; (c) why is an LVR cap required; (d) how did the Department investigate whether it could be safely increased from 30 to 50 per cent; (e) what approximate potential dollar value does the 30 to 50 per cent change represent in terms of potential borrowing capacity; (f) if (e) cannot be answered, how did the Department estimate the impact of the 30 to 50 per cent change; and (g) why can the LVR cap not be increased further?
AnswerView source ↗
Answered
17 September 2024
Responded by
Minister for Agriculture and Food representing the Minister for Housing
Response time
9 days
The State Government was asked by the sector to look at loan to value ratio (LVR) to unlock capacity and building capability in the community housing sector to increase the supply of social and affordable housing.
(a) Yes.
(b) Not applicable.
(c) Community housing is a critical component of the social housing system and provides critical support to people on the public housing waitlist. A cap on LVR assists in managing risk and ensures that lending secured against social housing is prudent and sustainable and supports the delivery of additional housing to people in need.
(d) The Department of Communities (Communities) consulted with the WA Treasury Corporation (WATC) and the sector.
(e-f) The borrowing capacity is dependent on each community housing organisation, their individual circumstances, willingness to lend, and the terms of their loan(s). The 50% LVR cap provides greater flexibility for the community housing sector, with an appropriate balance between risk and the sustainability of the sector. There have been no adverse events experienced by loan providers that have lifted their LVR.
(g) From advice of the WATC, Communities determined that an increase in the LVR cap to 50% was appropriate.
(a) Yes.
(b) Not applicable.
(c) Community housing is a critical component of the social housing system and provides critical support to people on the public housing waitlist. A cap on LVR assists in managing risk and ensures that lending secured against social housing is prudent and sustainable and supports the delivery of additional housing to people in need.
(d) The Department of Communities (Communities) consulted with the WA Treasury Corporation (WATC) and the sector.
(e-f) The borrowing capacity is dependent on each community housing organisation, their individual circumstances, willingness to lend, and the terms of their loan(s). The 50% LVR cap provides greater flexibility for the community housing sector, with an appropriate balance between risk and the sustainability of the sector. There have been no adverse events experienced by loan providers that have lifted their LVR.
(g) From advice of the WATC, Communities determined that an increase in the LVR cap to 50% was appropriate.
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