‘A necessary evil’: Buy-back scheme set to help Qld flood victims

Broker Meena Bebawy at Yellow Brick Road said the government’s scheme could provide some “comfort” to clients as financing concerns for damaged properties were mounting in the community.

“Some [clients] are asking questions as to ‘what loan-to-value ratio are we now expecting to be buying in those areas? Are we even able to do it?’

“And some that were in mid-finance approval, [are] wondering whether there are going to be any concerns – which we’re still waiting on the assessors.”

He said some valuers had also decided not to accept jobs in those areas, adding to delays.

“There’s valuation firms who are rejecting requests, so we’ve got a delay on seeing which valuation firm would accept the role and then to see what the report outcome would be,” Mr Bebawy said.

“The commentary [the valuers] put was that ‘they were unable to produce the job within the standard timeframe that’s requested of them within the banks requirements’.

“The client and the other side has been patient to wait so I think that excuse wasn’t necessarily a very warranted one.

“A property transaction has high emotions attached to it. So clients are already with factors outside of their control in a very high emotional state.”

In addition, some lenders are now requesting borrowers in flood-affected areas must provide a signed statutory declaration to show that there is no structural damage, or have another full valuation conducted, contributing to the growing uncertainty.

Clawbacks on some properties could be inevitable

Almost 7,000 homes in Queensland had been assessed as damaged from the flood event, with 500 homes earmarked as being approved for a government buy-back scheme.

While home owners choosing to buy back their property to the government could result in clawback on mortgages, Mr Bebawy said it would be a “necessary evil”.

“I think helping clients with their next stage is probably the more important focus,” Mr Bebawy said.

In the hard-hit town of Milton, there was growing community sentiment that the government should “buy back and use the land for something else”, said broker Suzy Macdonald at Yellow Brick Road.

“When the floods first happened people were saying ‘they need to buy back the properties that should never have been built here’,” Ms Macdonald said.

“The government approved these properties to be built in areas where it was prone to flooding.”

She said while the other two grants, to raise and renovate properties, could assist some people, buy-back is probably the “best option” for many.

While the details are yet to be finalised, Ms Macdonald said a buy-back scheme could allow brokers to assist clients in transitioning with new properties.

“If they find something else and they need a simultaneous settlement, they can change the security but they have to go through the lending purchase,” Ms Macdonald said.

“That’s actually something that would help customers if they’re in a financially different position if they need to borrow money.

“A lot of brokers might find themselves helping transition the clients rather than make a complete change.

“Once the details come out of these grants is when we can start looking at how we help them.”

[Related: Housing support for NSW flood-impacted communities]