POLICY ON PUBLIC SERVANTS HOUSING LOAN GUARANTEE SCHEME GOVERNMENT OF LESOTHO

Transcription

1 POLICY ON PUBLIC SERVANTS HOUSING LOAN GUARANTEE SCHEME GOVERNMENT OF LESOTHO DECEMBER 2001

2 2 PUBLIC SERVANTS HOUSING LOAN GUARANTEE SCHEME 1.0 PREAMBLE 1.1 The Government of Lesotho presently houses a limited number of Public Servants while the majority reside in privately rented housing. Increasing the housing stock has been constrained by lack of adequate resources. This scheme has been borne out of Government s desire to promote home ownership for Public Servants. 1.2 It is anticipated that the Scheme will now make it possible to attract, and retain critical skills that have hitherto opted for the more lucrative private sector. The availability and accessibility of credit for housing will not only activate the property development market but the economy, as a whole will benefit from the spillover effect of the housing industry. 2.0 ESTABLISHMENT AND GOVERNANCE 2.1 This Scheme is established by the Minister for the Public Service under powers conferred on him by Section 9 (2) (ix) of the Public Service Act OBJECTIVE 3.1 The objective of the Scheme is to promote and enhance home ownership by public servants. 3.2 To provide guarantee to participating banks to cover 15% of the capital, whereas the banks will lend up to 100% of the property cost. After the Public Servant has repaid up to the guaranteed amount, 2

3 3 the Government s liability will be discharged. 4.0 SCHEME ADMINISTRATION 4.1 The Government shall establish an Inter-ministerial Public Service Housing Committee to oversee the administration of the scheme. The committee will be composed of members drawn from the Ministries of Public Service; Local Government; Finance; and Law and Constitutional Affairs. Other parties may be co-opted, as deemed necessary. 4.2 The chairmanship of the Committee will be vested upon the Ministry of the Public Service represented by the Principal Secretary while the Ministry of Local Government, represented by the Principal Secretary, will be alternate chairman. The Committee will constitute a technical sub-committee to be chaired by an officer from the Ministry of Local Government. 4.3 The Committee will convene meetings on a monthly basis. The Chairman may however, call meetings at anytime at his discretion. 5.0 TERMS AND CONDITIONS 5.1 Maximum entitlements for housing loans will be determined from time to time by the Minister for the Public Service. 5.2 Loans will be repaid over periods not exceeding 20 years. 5.3 Total monthly deductions for house loans shall not exceed 40% of one s monthly salary. 5.4 Beneficiaries of the scheme will be required to sign consent forms: a) Issuing irrevocable authority to Government to remit their salaries directly to the Lesotho Bank in order for the bank to effect 3

4 4 deductions for monthly instalments under the scheme. b) Issuing irrevocable authority to Government to deduct from salary and remit directly to Nedbank an amount equal to the monthly instalment required by the bank under the scheme. c) Ceding their pension and/or gratuity to Government as security for the amount of the loan guaranteed by the Government. This is in line with Section 12 of the Basutoland Pensions Proclamation of 1964 (These forms are Appendices A, B and C respectively). Such benefits will be used to meet the employee s liability to the bank under the guarantee, in the event of default or termination of service; in particular the benefits under such circumstances will be used to pay the amount guaranteed by the Government. 5.5 Applicants will be required to meet the lending criteria of the lending banks. 5.6 Applicants must have good track record, in particular as it pertains to servicing of Government debt. 5.7 Applicants will reserve the right to apply for loans from a bank of their choice. 5.8 Applicants who are granted a loan and occupy a government house must vacate the house within a period specified under clause of this policy. 6.0 APPLICATION FOR LOAN 6.1 Any Public Servant who wishes to benefit from the scheme will make an application through his/her Ministry s chief accounting officer. The application will be reviewed by the Inter-ministerial Committee who will rule whether the officer qualifies under the 4

5 5 Scheme before passing it to the participating Bank, which will have the sole responsibility for loan appraisal. 7.0 APPLICATION OF LOAN PROCEEDS 7.1 The mortgage loan so obtained will be utilised to purchase a new or old house; complete an ongoing house construction; build a new house and to renovate an existing house. 8.0 PARTIES TO THE SCHEME 8.1 The Government of Lesotho 8.2 Public Servants 8.3 Lesotho Bank (1999) Pty Ltd 8.4 Nedbank (Lesotho) Pty Ltd 8.5 Any other banks and/or institution that may be invited by Government or that may expressly apply and qualify to join the Scheme. 9.0 OBLIGATIONS OF THE PARTIES 9.1 The Government To ensure that the scheme is established through adequate legislative mechanisms and has proper legal status Administration and regulation of the Scheme To provide guarantee in the form of undertaking, to the participating banks, equivalent to 15% of the 5

6 6 capital amount as shown in Appendix D To determine qualification of any other parties as it may deem necessary to co-opt to the scheme To set up a fund under Section 18 of the Finance Order No. 6 of 1988, which fund will enable Government meet its obligations under the guarantee Government will reserve the right to reject an application. 9.2 The Public Servants Meet the terms and conditions of the participating banks Fully amortise the loan and pay other agreed upon charges over the loan tenure Fully disclose existence of other loans with the Government Satisfactorily complete the prescribed application form Execute both the Deed of Cession as well as Consent to remit salary to lending bank Vacate government house within 6 months of being granted a loan. 9.3 The Participating Banks Appraise and determine applicant s eligibility based on the bank s underwriting criteria Execute agreement between the bank and Government Furnish the Government with a schedule of all fees 6

7 7 payable by the beneficiaries under the Scheme Periodic review and resetting of the interest rate. The review period will be agreed upon between the bank and the Government The bank will reserve the right to grant or deny loans ELIGIBILITY CRITERIA 10.1 An applicant will be required to have been a Public Servant for a minimum period of two (2) years and to be on permanent and pensionable terms Public Servants on contract terms must be eligible for gratuity to secure the amount guaranteed by the Government Public Servants who are temporary must have served for 10 years Public Servants should have a satisfactory disciplinary record and must not have a running disciplinary case Public Servants may not have another existing mortgage loan with a financial institution REPAYMENT 11.1 Beneficiaries of the Scheme shall have their salaries remitted directly to Lesotho Bank where a stop-order facility to repay the loan will be arranged. This facility shall stay in place until the loan is fully amortised With regard to Nedbank, beneficiaries of the scheme shall give authority to Government to deduct monthly instalments from salaries and remit same to the Bank. 7

8 TERMINATION OF SERVICE 12.1 Where a Public Servant leaves the public service for whatever reason before full repayment, the Government guarantee will be withdrawn and the officer shall be required to make arrangements with the participating bank in accordance with the bank s rules and regulations. Government will reserve the right to pay from the employee s terminal benefits, the amount it has guaranteed to the bank REVIEW 13.1 The Government may review this policy from time to time as need arises. GOVERNMENT OF LESOTHO APPENDIX A 8

9 9 ( For Lesotho Bank applicants only) CONSENT TO REMIT SALARY I presently employed by the Government of Lesotho [hereinafter referred to as the Government ] hereby consent that; My [hereinafter referred to, account no in order to enable the Bank to deduct the monthly installments for the loan advanced to me under the Public Servants Housing Loan Guarantee Scheme and same be transferred to my mortgage account with the Bank. And 2. In the event of retirement, the Government should remit my pension directly to the Bank for payment of monthly installments due by me to the bank. 9

10 10 Signed at this day of... (Applicant) SIGNATURE.(To be endorsed by the bank) APPENDIX B 10

11 11 (For Nedbank applicants only) CONSENT TO DEDUCT FROM SALARY I. Presently employed by the Government of Lesotho ( hereinafter referred to as the Government) hereby consent that; 1. The repayments of a loan applied by me from Nedbank (hereinafter referred to as the bank), should be deducted from my salary and transferred to my mortgage account with the Bank; And 2. In the event of my retirement, the Government should deduct from my pension an amount equivalent to the installment due by me to the Bank. Signed at this..day of.....(applicant) SIGNATURE.(To be endorsed by the bank) 11

12 12 APPENDIX C MEMORANDUM OF AGREEMENT OF CESSION entered into at on the day of. By.(hereinafter called the cedent) and the Government of Lesotho represented by acting in his capacity as ( hereinafter called the cessionary). WHEREAS the cedent is entitled by virtue of being an employee of the Government of Lesotho. AND WHEREAS the cedent has agreed to cede and transfer to the cessionary his terminal benefits as security for any money which the cessionary may have to pay under the guarantee given to..(bank) NOW THEREFORE IT IS AGREED AS FOLLOWS; 1. The cedent hereby cedes and transfers to the cessionary his terminal benefits equivalent to the amount and extent of the cessionary s liability under the guarantee referred to in the recitals as security for the present and any future indebtedness of the cedent to the cessionary which may arise under the guarantee. 12

13 13 The cedent hereby authorizes and empowers the cessionary to claim and receive the terminal benefits as may become due to the cedent equivalent to the amount and extent of the cessionary s liability under the Public Servants Housing Loan Guarantee Scheme. 2. The cessionary hereby accepts the said cession. Thus done and signed at on.. day of in the presence of the undersigned witnesses.. SIGNATURE (cessionary) As witness SIGNATURE (cedent) As witness 1. APPENDIX D

14 14 GUARANTEE FORM Whereas the..bank ( hereinafter referred to as the Bank) is to grant to (hereinafter referred to as the mortgagor) a loan for the sum of M..(hereinafter referred to as the loan) to be secured by a first mortgage bond (hereinafter referred to as the bond) for the sum of M.. in favour of the Bank as part of covering security over the following immovable property, namely plot No. situated at.. Urban Area, in the district of (hereinafter referred to as the property). And whereas the GOVERNMENT OF LESOTHO has agreed to guarantee repayment by the mortgagor to the Bank up to a maximum of 15% of the capital loan which may hereafter become owing under the provisions of the loan and the loan and the bond subject to the limitations hereinafter contained. Now therefore, the GOVERNMENT OF LESOTHO represented herein 14

15 15 by..in his capacity as. Do hereby guarantee due and punctual payment by the mortgagor to the Bank under the bond. The liability of the Government under this guarantee shall be discharged when repayments by the mortgagor in reduction of the loan total 15% of the principal amount. Thus done and signed at on this..day of. before the undersigned witnesses. WITNESS 1. FOR GOVERNMENT OF LESOTHO 2.. APPENDIX E 15

16 16 CONSENT TO VACATE A GOVERNMENT HOUSE I. Presently employed by the Government of Lesotho[hereinafter referred to as the Government} hereby consent that; I will vacate a government house within a period of 6 months of being granted a loan as indicated in clause of the Policy on Public Servants Housing Loan Guarantee Scheme. Signed at.. this day Of. SIGNATURE..(Applicant) 16