Residents of one of Maitland’s oldest streets, adjacent a proposed low-income housing precinct, are being slugged in excess of $5000 a year for home and contents insurance.
The premiums threaten to make the federal government-supported housing project unaffordable with potential buyers faced with $100-a-week premiums on top of $250-a-week mortgage payments.
Stephen and Jane Duma, residents of Bourke Street, face an insurance hike from $737 in 2010, to $6444; that’s $537 a month.
“You can’t expect a young couple to buy a house in the area and pay that kind of insurance on top of a mortgage,” Mrs Duma said.
Hunter MP Joel Fitzgibbon said new housing, built with flood mitigation in mind, should be exempt from high premiums.
He said the council would not be permitting these houses to be built without adequate flood mitigation.
“In that case I don’t see the justification for insurance companies charging premiums like that,” Mr Fitzgibbon said.
While existing residents in the area who own their home can dispense with part or all of their insurance cover, mortgage holders are bound by their contracts to be insured.
“First homebuyers probably can’t afford to buy in the area with that kind of insurance,” Mr Duma said.
Maitland real estate agents have estimated the proposed 1300 homes would start at $180,000 – the maximum amount a couple with a combined income of $50,000, with no children, can borrow.
Insurance in excess of $5000 a year, now common across Lorn, South Maitland and central Maitland, would strain the budget by $100 a week in addition to $250-a-week mortgage payments (based on a 30-year loan at 6.04 per cent).
River Realty told the Mercury last week that buyers were reluctant to buy in central Maitland.
“They often have trouble securing finance and insurance compared to properties in East Maitland and Rutherford,” business development and sales director Sharon Wells said.
The increased insurance premiums have been blamed on storm water inundation and floods in Queensland and Victoria.
The 1300 homes proposed in the Athol D’Ombrain Drive, at the bottom of Bourke Street, are below the Duma’s house.
The 1955 flood put 15 centimetres of water across the floor of the Duma’s weatherboard house.
“It’s a causeway, so I would like to see how they’re going to set up these homes,” Mr Duma said.
The Dumas said the $6444 insurance bill was simply too much.
“I could invest that money for 10 or 20 years and have enough to repair the place in the invent of flood,” Mr Duma said.