Firms asked to help workers buy home

The National Business

By LEMACH LAVARI
MANY employees in Papua New Guinea who want to buy a house for the first time through a housing loan cannot afford the upfront contribution, according to a real estate company.
Edai Town Development Ltd director Kym Yong told a Port Moresby Chamber of Commerce and Industry breakfast yesterday that employers can help their employees by making the initial equity payment for housing loans.
She said this was one way employers could retain their staff, improve their performance and cut cost on accommodation in the long run.
Yong was addressing a breakfast event hosted by the Port Moresby Chamber of Commerce and Industry (POMCCI).
She said the availability of land and cooperation between the Government and Bank South Pacific (BSP) had made it possible for more people to buy a house.
Internal Revenue Commission (IRC) policy and advice manager Steve Burke and BSP customer experience and retail support deputy general manager Kili Tambua also spoke at the event.
Burke said under the Income Tax Act, the IRC was allowing tax concessions through the Citizen First Time Home Buyers’ Scheme.
He said employees were required to submit their housing policies to the IRC.
Under the scheme, the IRC would not apply salary tax for housing allowances paid by an employer towards repaying a housing loan.
The IRC also allowed for an employer to pay a non-repayable grant on behalf of its employee towards a housing loan.
There is no limit to how much money an employer can pay. This grant will not be subject to salary tax.
Burke said the value of the house and property must not exceed K500,000.
Another concession allows employees to put together a repayable amount based on their recreation leave or superannuation and give that as upfront payment.
He said this is repaid on retirement or on termination of entitlements.
For this the value of the land and house must not be more than K400,000.
Tambua said BSP had seen a rapid growth in the market for homeownership through the bank’s First Home Ownership Scheme.
He said the growth was due to the PNG LNG construction phase and government intervention. The BSP scheme requires an upfront payment of 10 per cent and an interest rate of 4 per cent over 40 years.