The government’s KiwiBuild scheme once promised to build 100,000 affordable new homes over the next ten years. However, this ambitious goal has recently become much more of a distant dream. Now, the government has officially hit the reset button on their initial plans, and are instead providing several new options for first-home buyers across New Zealand.
With certain changes coming in on 1 October 2019, it’s important to understand what is available when you’re buying a first home. Here’s everything you need to know about the KiwiBuild reset.
What About All the Houses?
While many KiwiBuild houses have been constructed, the remaining $400 million in funds are being reallocated from the project to build new homes in more desirable areas, with the hope of attracting a greater number of first-home buyers. This shift in focus could support around 4,000 households entering the market through schemes like shared equity or a rent-to-buy initiative – and the great news is that these supports are available to all buyers and not just existing KiwiBuild members.
Changes In Government-based Loans
One of the other major shifts to come on 1 October is in government-provided home loans such as the Welcome Home Loan, which has now been renamed to the First Home Loan. In the past, a First Home Loan allowed you to purchase a mortgage with a 10% deposit. Although this is much less than the usual 20% required by most lenders, it may still be too high for some households. To address this issue, the First Home Loan will now allow you to purchase with a deposit of just 5%.
On the other hand, the KiwiSaver Homestart Grant has been renamed the First Home Grant and is now available to all buyers (not just KiwiSaver members) – subject to certain income restrictions. Plus, the rules that restricted occupying owners of small apartments from selling before three years has been reduced to one year, and the asset test for previous homeowners has gone out the window.
All of this should make it easier for both first-home buyers and ‘second chancers’ to enter the market – particularly in high-priced and high-demand areas such as Auckland.
Where Should I Start?
The KiwiBuild housing reset has essentially broadened the criteria for buyers and developers alike, opening doors for a number of Kiwis who may have otherwise found themselves closed out. While there is still a lot to be finalised in the new versions of these schemes, the changes we have seen already look very promising.
In summary, the key developments to come are:
- Name changes in government schemes.
- Dropping the minimum deposit from 10% to 5%.
- KiwiBuild funds being reallocated towards a more dynamic goal.
If you’re looking for a mortgage adviser who believes in making your dreams a reality, talk to our friendly team at Finance Matters. With all of these new options available for first-home buyers, having an expert on your side will always ensure the best results – getting you into that perfect property in no time.
Please feel free to get in touch whenever you’re ready to start your mortgage journey. We look forward to hearing from you!
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