Home Agents & Agencies Lender Bans Multiple SA Suburbs for “Off the Plan” Development Loans

Lender Bans Multiple SA Suburbs for “Off the Plan” Development Loans

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Written by Stefan kostarellis

Financial services group MyState is set to ban funding for off-the-plan borrowers in SA suburbs Cultana, Iron Knob, Whyalla, Whyalla Norrie and Whyalla Jenkins.

The Australian Financial Review reported earlier this month that the SA suburbs were among almost a hundred suburbs added to a confidential blacklist covering four states.

The high-risk suburbs are reportedly suffering due to over-supply, falling demand and a backlog of incomplete deals caused by a lending freeze on foreign purchasers.

In September last year, ABC News reported that sixteen international investors would have houses worth up to $2 million forced onto the market after they were found to be in breach of Australia’s foreign investment rules.

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The properties in question were purchased by investors from China, Malaysia, Canada and the UK.

The Coalition has continued to crack down on foreign-owned property and is reportedly investigating hundreds of cases of fraudulent applications.

MyState is advising staff and mortgage brokers that no “off the plan” applications will be considered for the 90 high-risk postcodes in Western Australia, Queensland, South Australia and Tasmania.

In addition, lending for other property deals in the designated suburbs has been capped at $500,000 and 30 per cent deposits.

MyState is headquartered in Hobart, Tasmania and was formed in 2009 following the merger of the Tasmanian Perpetual Trustees and MyState Financial. And while the lender’s largest single market is currently Tasmania, almost 25 percent of its home loans are in Victoria and NSW.

Last month, The Age reported that thousands of Victorian buyers who bought off the plan could struggle to finance their purchases due to new minimum design standards requiring more space.

SA Real Estate News has reached out to agents in the SA postcodes affected by the ban, but did not receive a response.