Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

A hand up to home ownership

Hon Steve Maharey
Minister of Housing


A hand up to home ownership

"The Kiwi dream of owning your own home will be brought within the grasp of thousands more New Zealanders each year as a result of Budget 2005," says Housing Minister Steve Maharey.

The components of the package are an extension of the Mortgage Insurance Scheme, a housing deposit subsidy available through KiwiSaver, and a home ownership education programme.

"When fully in place, it is expected to help 5000 to 8000 first home buyers a year," Mr Maharey said. "It does not exclude low income households, but is aimed primarily at those earning above $40,000 a year, as borrowers must be able to service a mortgage."

The Mortgage Insurance Scheme [MIS] helps people who can support a mortgage but can raise little or no deposit. It was introduced as a pilot programme in 2003 by Housing New Zealand Corporation and Kiwibank. Applicants must have a good credit history, not already own a home, and intend to live in the house.

The scheme enables people to borrow most or all of the cost of a house with little or no deposit. Housing New Zealand Corporation insures against bad debts by charging a premium of 3 per cent of the loan. One per cent is paid by the borrower and 2 per cent by the government. If the borrower defaults, the insurance covers any shortfall between the outstanding loan and the amount recovered through a mortgagee sale. To date, there have been no defaults.

The budget aims to increase the number of loans under the MIS, from fewer than 1000 a year to 5000 a year by 2007-08. It will do this by:
allowing lenders beyond Kiwibank to participate; and
raising the eligibility cap from $65,000 to $85,000 annual income for a household with one or two borrowers, and from $100,000 to $120,000 for households with three or more borrowers.

These changes will take effect in July 2005 and are expected to cost $22 million a year from 2008-09.

First home buyers who have been members of KiwiSaver for three years will be eligible for a one-off deposit subsidy of $1000 for each year of KiwiSaver membership, to a maximum of $5000. They will also be able to put their savings, plus interest, towards the price of their new home, and put their subsequent KiwiSaver contributions towards their mortgage.

Preliminary estimates are that around 3000 households a year will take advantage of the home buying assistance offered by KiwiSaver. These opportunities will be available from 1 April 2010 – three years after KiwiSaver’s start date of 1 April 2007. The annual cost is estimated to rise to around $35 million a year.

The criteria attached to the deposit subsidy reflect the fact that it is intended to assist toward the purchase of a lower-cost ‘starter’ home. Income and purchase price caps will apply but have yet to be finalised. House price caps will reflect regional price variations.

The deposit subsidy will be available to members of registered superannuation schemes that meet eligibility criteria. Eligibility will be determined on an individual basis. The subsidy will be in the form of a suspensory loan, rather than an unconditional grant, and will have to be repaid if the recipients stop living in the house within a reasonable period.

"The housing package has been designed to be responsive to individual circumstances," Mr Maharey said. "Some home buyers will need only the Mortgage Insurance Scheme. Others might take advantage of just the deposit subsidy, or the draw down facilities from KiwiSaver. Some will need to draw on all these initiatives to get into their own home."

Mr Maharey said the education programme would not be compulsory but that first home buyers would be strongly encouraged to take advantage of it to improve their knowledge of what home ownership involved. Plans were to provide seminars for 1000 people next year, rising to around 5000 a year by 2006-07, at a cost of $2.4 million a year.

"The government is conscious of the need to provide home ownership assistance that does not distort the housing market or encourage people to borrow beyond their means. I am confident we have got the balance right with this package," Mr Maharey said.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Decision Day: Peters Chooses Labour

Winston Peters says he will form a Government in coalition with Labour and the Greens giving confidence and supply.

Peters said he had been offered the position of Deputy Prime Minister and a number of other ministerial posts would go to his colleagues

He said economic and monetary policy changes were needed to face a coming economic downturn.>>>More

Reaction

Labour on its agreement |Peters: Post-Election Announcement Speech | Greenpeace “cautiously hopeful” about new Government | ACT - Madman on the loose | E tū ecstatic | Chamber welcomes the outcome

 

Climate: Increasing Greenhouse Emissions Hit NZ

New Zealand is seeing impacts of excess greenhouse gas emissions in our climate and oceans, according to the latest national report from the Ministry for the Environment and Stats NZ about the state of the atmosphere and climate…More>>

ALSO:


Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>

ALSO:

Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>

ALSO:

Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>

ALSO:

Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>

ALSO:

Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>

ALSO:

Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election