With the ever-increasing unaffordability in the New Zealand property market the Government has recently announced, via the 2022 Budget, changes on how it can assist first home buyers entering the property market.
First Home Grant
If you meet certain criteria Kāinga Ora will contribute towards your deposit to a maximum of $10,000. The major change recently announced for this grant acknowledges house price caps have been increased across the country to reflect the ever-changing property market. For instance, in Hamilton City the cap has increased from $525,000 to $650,000 for a pre-existing home and from $600,000 to $725,000 for a new build property.
Relocatable Homes have also been included in the new build category as long as the house received a Certificate of Code Compliance within the last 12 months. Likewise, members of eligible Progressive Home Ownership rent-to-buy schemes can access the new build grant.
Kiwisaver requirements for the grant have also been updated. The minimum contribution an individual must make towards their Kiwisaver fund is 3% of their total income or a minimum of $1,000 per annum.
It was further announced that the First Home Grant has added a new category of person, being ‘individual buyers with dependents’. A person in this category can apply for this grant if they earn an income up to $150,000.
The changes to the First Home Grant took effect from 19 May 2022.
First Home Loan
This loan is directed at first home buyers who need a top-up to their deposit. Often lenders require a borrower to have a 20% deposit. The First Home Loan can assist as long as the borrower already has a 5% deposit.
The greatest change for this government loan announced recently is the complete removal of the house price cap. Lender and income requirements are still in effect.
Like the First Home Grant, the First Home Loan has introduced a category of person being ‘individual buyers with dependents’ and this category also increases the income to $150,000.
The Government has announced a change to the Kāinga Whenua Loan Scheme, increasing the loan cap from $200,000 to $500,000, which will provide greater opportunities for those building, relocating or purchasing a home on Māori land.
The changes to the First Home Loan are anticipated to come into force on the 1st of June 2022.
For more information on the First Home Grant and First Home Loan please contact us after visiting the Kāinga Ora website to see if you are eligible.
You might like to use this interactive tool to determine which products you may be able to apply for: https://kaingaora.govt.nz/home-ownership/first-home-decision-tool
Cameron Blue is part of our Private Client team at Norris Ward McKinnon.