Package to better support first home buyers
Hon Dr Nick Smith
Minister of Housing
11 August 2013
Package to better support first home
Housing Minister Dr Nick Smith today welcomed the Government’s decision to double the number of KiwiSaver deposit subsidies and treble the number of Welcome Home Loans to support first home buyers.
“This package is about helping thousands of kiwi families get into their first home by assisting them with a deposit and providing a guarantee for their mortgage,” Dr Smith says.
“We are changing the house price caps and income limits to increase eligibility for the KiwiSaver First Home Deposit Subsidy and Welcome Home Loans. These are expected to double the number of first home buyers receiving the subsidy from 4,700 to 10,000 a year and treble the number of Welcome Home Loans from 845 to 2,500 a year.”
The house price caps for Welcome Home Loans are currently $350,000 in high priced markets like Auckland, Wellington and Christchurch and $280,000 in other regions. For the KiwiSaver First Home Deposit Subsidy they are $400,000 in Auckland, Wellington City, Selwyn and Queenstown Lakes, and $300,000 for other regions.
The new price caps are being aligned for both Welcome Home Loans and the KiwiSaver First Home Buyer Subsidy to $485,000 for Auckland, $425,000 for Wellington City and Queenstown Lakes, $400,000 for Christchurch and Selwyn, $350,000 for Porirua City, Hutt City, Upper Hutt, Kapiti Coast, Tasman/Nelson, Western Bay of Plenty, Hamilton, Tauranga, Waimakariri, Thames Coromandel, and $300,000 for other regions.
The Government is also aligning the income limits of the two schemes. The KiwiSaver First Home Deposit Subsidy is currently limited to $100,000 for one and two buyers and $140,000 for three or more buyers. The Welcome Home Loan income limit is $85,000 for one or two buyers and $120,000 for three or more. The new income limits for both schemes will be $80,000 for a single person and $120,000 for two or more. Most deposit subsidies are for couples and the net effect of the changes is expected to increase eligibility by 11 per cent.
“The house price and income limits are about ensuring taxpayer assistance is targeted at families on modest incomes buying modest homes. The changes are needed to make them realistic and fair,” Dr Smith says.
“We are also changing and aligning the minimum deposit thresholds of the two schemes to 10 per cent. The current Welcome Home Loan minimum deposit threshold is 15 per cent over $200,000 whereas the KiwiSaver First Home Deposit Subsidy has no minimum deposit.
“It is reasonable to expect first home buyers to have saved some funds before getting other taxpayers support to buy a home. The minimum 10 per cent deposit includes any funds from the KiwiSaver First Home Withdrawal and Deposit Subsidy.
“These changes are particularly significant for Auckland where the unrealistic price caps were severely restricting access to the two schemes. The number of Aucklanders’ accessing the First Home Deposit Subsidy is expected to grow from 1,030 to 3,000 per year and Welcome Home Loans from 52 to 867 per year.
“This package of changes to support first home buyers complements the Government’s broader package of reforms underway to tackle the root causes of housing affordability including land supply, infrastructure costs, building material costs, building sector productivity, and compliance costs.”
The changes will take effect on 1 October. The cost of increasing the house price caps and income limits for the KiwiSaver First Home Deposit Subsidy is $46.6 million and $17.3 million for expanding Welcome Home Loans. The total cost of the package is $64 million over four years.
More information on how KiwiSaver can be used for buying a first home can be found at http://www.hnzc.co.nz/rent-buy-or-own/buying-your-first-home-with-kiwisaver
More information on Welcome Home Loans can be found at http://www.welcomehomeloan.co.nz/