Home Buyer Assistance
Helping first home buyers, especially in the Auckland marketplace, has been a topic of much discussion in 2017. While there are price pressure points, economic and lending hurdles to be overcome, there are several products and subsidies available to first home buyers, who can use the products and subsidies in conjunction with each other. The products and subsidies will help first home buyers onto the property ladder.
FirstHome is a programme run by Housing New Zealand. They select a range of affordable properties from throughout New Zealand; particularly where changing demand has resulted in an over-supply of some types of houses. Housing New Zealand make those houses available for sale to eligible first home buyers. If you meet the criteria, you are eligible to receive a grant of up to 10% of the purchase price to a maximum of $20,000. So, to qualify you need:
- to be 18 years or older
- to be a New Zealand citizen or permanent resident currently residing in New Zealand
- to be a first-time home buyer and currently not owning any other property or land
- to plan to live in the house for at least three years and not to purchase it for investment or rental purposes
- to have never received a FirstHome grant
- to have earned a gross annual income of $85,000.00 or less in the last 12 months for one applicant, or a combined gross annual income of $130,000.00 or less in the last 12 months for two or more applicants; and
- to be pre-approved by a lender; therefore, you will need to have a valid pre-approval letter or certificate from a lender who states the maximum amount that you can borrow.
Previous home owners may still be eligible if they meet all other qualifying criteria and their combined realisable assets (a defined term that refers to tight assessment requirements) do not add up to more than $80,000. Essentially, Housing New Zealand assesses if you are financially in the same position as a first home buyer.
Axis Series Homes
Axis Series Homes is a programme also for first home buyers or those in the same financial position as First Home buyers. It’s a product and policy developed by HLC (2017) Limited, who is responsible for the well‑known Hobsonville Point development, amongst other significant land developments. These homes are sold at specific price points ranging between $450,000.00 and $650,000.00, and 20% of the homes built at Hobsonville Point need to be sold within that range.
Find further detail at axisseries.co.nz. However, the eligibility criteria are similar to FirstHome, except that the live‑in requirement is two years, rather than three. And, approved applications go into a ballot because these homes are in high demand.
KiwiSaver Home Start Grant
If you have contributed to KiwiSaver for three years, you may be entitled to the Home Start Grant. The grant ranges from between $3,000.00 to $5,000.00 and can be put towards paying for a first home. After you buy your first home, you have to live in it for a minimum of six months from the settlement date or the date the Code Compliance Certificate is issued for the property. You can combine individual Home Start Grants (there are caps of course) and you can receive the subsidy only once. In Auckland, the eligibility criteria include a house price cap for $600,000.00 on existing older properties, $650,000.00 on newer properties, and the income caps are the same as for the FirstHome and Axis Series criteria. Again, while the subsidy is aimed at first home buyers, those applicants who are demonstrably in the same financial position as first home buyers may also qualify.
KiwiSaver First Home Withdrawal
This is a relatively well‑known way to help home buyers acquire a property. As with the KiwiSaver Home Start grant, you need to be a member of KiwiSaver for at least three years before you can make a withdrawal, and you must intend to live at the property. It is not available for an investment property. Changes to the KiwiSaver legislation mean that persons who have previously owned property, but no longer do, may also be eligible to utilise their KiwiSaver savings towards the purchase of a property.
Welcome Home Loans
A Welcome Home Loan is designed for first home buyers who can afford to make the payments on a home loan, but have trouble saving for a large deposit, and who need assistance where banks are requiring LVRs (loan to value rations) of 80% or less. With a Welcome Home Loan, you only need a 10% deposit rather than 20% as often required by most large trading banks. Because, the 10% can be treated by those participating banks as an equity top-up. The criteria, including income and house price caps, are similar to the other schemes, and applications still need to meet the specific lending criteria of their chosen bank. Three or more borrowers can join up to purchase a home, and your deposit can be gifted by a relative. (Where gifts are proposed, we recommend you take advice from our trusts and estates team first.) Only certain banks are Welcome Home lenders: Kiwi Bank, SBS Bank, TSB Bank, Westpac, The Co‑operative Bank, and a few others.
Using one or a combination of the available products, subsidies, and deposit top‑ups can mean that for some buyers making the first step onto the property ladder may be closer than many think. Although, making the various applications and attaining the qualification is a significant undertaking and can be complex. In addition, the timeframes for qualifications and payments of deposits and settlements need to be carefully worked through. Buyers must also comply with deposit and settlement payment obligations under any agreement for sale and purchase. We can assist with ensuring that all your paperwork, timeframes, and payments to pool these subsidies and products together can be worked through correctly and on time.
Source: InBrief Spring 2017