A glimmer of hope for first home buyers?

FIRST HOME BUYERS SHOULD LOOK CLOSELY AT THE FINANCIAL SUPPORT PACKAGES NOW AVAILABLE

There is some hope for first home buyers as property prices soften at last.  The rules around using your KiwiSaver to buy your first home have been relaxed a little, property price caps for the First Home Loan have been lifted, and there is now additional support for first home buyers available in the form of the Kāinga Ora First Home Partner Scheme.

We recommend first home buyers look closely at the requirements for all of these support packages to see what you may be eligible for.

It’s also important to get pre-approvals where possible, and submit applications early. Applications can take between 4-6 weeks to process for all of these options, and if you need the funds for your deposit then you’ll need your ducks in a row.

KiwiSaver withdrawal

If you have been contributing to KiwiSaver for at least three years, or at least $1,000 annually (whichever is lower) you may be entitled to withdraw your savings, as long as you leave a minimum balance of $1,000 in your KiwiSaver account.

You also need to:

  • intend to live in the property you are buying as your main residence
  • have never owned your own property or land before*, and
  • have never made a withdrawal from a KiwiSaver scheme to purchase a home before.

(* there are a couple of exceptions to this, ask your advisor).

You are only allowed to make one first-home related withdrawal from your KiwiSaver so you’ll need to decide whether you want to use the funds to pay the deposit on the property, or on settlement. If you want to use them to pay some or all of your deposit, you’ll need to make it clear to the vendor that you are using KiwiSaver for the deposit, as they’ll need to agree to hold the funds until settlement – they won’t be able to access them right away.

First Home Grant

If you have been contributing to KiwiSaver for at least three years, have a household income of less than $95,000 per year (one person), less than $150,000 (two or more people), or less than $150,000 per year (one person with dependents), are purchasing or building your first home, and are planning to live in the house for at least six months from settlement/completion, you may be entitled to a First Home Grant. The First Home Grant ranges from $3-5,000 per member for existing homes and $6-10,000 for a new home or land to build on.

The property needs to have a purchase price within the regional price cap, which for Kaipara is $525,000 for an existing home ($875,000 for a new home).

You will also need to have a deposit on the property that is 5% or more of the purchase price, which can include any KiwiSaver first home withdrawals, the First Home Grant, savings or funds gifted by a relative. You can only receive the First Home Grant once.

First Home Partner Scheme (FHPS)

The FHPS is a new scheme which assists qualifying first home buyers by contributing funds (maximum of 25% purchase price, or $200,000 (whichever is less)) towards the purchase price. In return Kainga Ora enters into shared ownership agreement on the property. The first home buyer then does their best to purchase Kainga Ora’s share of the property back within 15 years of the settlement date. However, they must purchase the share back in full within 25 years of the settlement date. Kainga Ora must give permission before making any improvements or renovations, or selling the property.

You’ll need to have a total household income (before tax) of less than $130,000, good credit and a minimum 5% deposit towards the purchase price to qualify for the FHPS.

We recommend talking to your property lawyer or bank about the best financial support for your situation.

How we can help

Our highly experienced, trusted Property team can help guide you through your rights and obligations.  You can view our Property team here.

WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.

Our thanks to Lina Khan for writing this article.