FLISP, or Finance Linked Individual Subsidy Program, is regarded as a different variety of F-word in some property circles. However, this maligned and misunderstood government subsidy that aims to help first time home buyers afford their own property might deserve a little closer inspection than a five-lettered frustration.
While understanding the mechanisms that go on behind the scenes can be a little tricky, there are some straight forward criteria to knowing if you or your client qualify for a FLISP grant:
- First time home buyer who has never benefited from a housing scheme before
- Legal South African resident with a gross household income between R3501 and R15000 per month
- A pre-approved home loan from an accredited financial institution
- If single, they must prove they have a dependant(s) who are not current home owners
The best part about the FLISP subsidy is in fact its qualification criteria. Not only does it indicate the person is ready to buy a home but it gives the agent or developer a clear indication of how much they can afford, and the size of a their potential deposit. This is because the FLISP grant can be used in 2 ways: either as a lump sum for a deposit or a large cash injection to lower the overall payment.
While this might seem to be a only a minor help for agents and developers, the recent interest rate hikes, and expected future increases this year, will most likely leave prospective home buyers struggling to reach the accepted affordability status in order to afford to purchase. FLISP could well be the make or break cash injection that gets the deal over the line.
“The only time an agent or developer might expect a delay is when the FLISP subsidy is required to make up a shortfall in the deal – like a deposit,” says conveyancing lawyer and FLISP expert Meyer de Waal. “If the FLISP subsidy is done retrospectively, up to 24 months in some provinces, the cash injection will be used to drastically reduce the bond amount. This is an encouragement to developers and agents as it immediately lowers their overall risk of a default on the bond.”
Harnessing government subsidies like FLISP will not only help many first time home buyers get a property of their own, but will also allow developers and agents to sell their units quickly and reliably. “Forewarned is forearmed” – The FLISP subsidy takes most of the risk out of selling a home to a first time buyer simply because of its strict criteria. Agents and developers are secure in the knowledge that their potential buyers are well financed, pre-approved and armed with a healthy deposit.
PropertyEngine will be working together with Meyer de Waal over the next while to help developers looking to help clients with FLISP and streamline the process. Until such time if you want more information on how you can make the FLISP subsidy work for you – head to www.flisp.co.za and get in contact with their team of experts