1 October 2013

FirstHome launched to support provincial first home buyers

A new Housing New Zealand initiative called FirstHome to help families buy their own home was announced today in Blenheim by Housing Minister Dr Nick Smith.

“FirstHome will help modest income earners in provincial New Zealand buy their first home by gifting them a 10 per cent deposit and giving them priority to purchase surplus vacant state houses no longer needed by Housing New Zealand,” Dr Smith says.

“FirstHome will improve housing outcomes at both ends of the affordability spectrum. It will help modest income families in provincial New Zealand buy their first home. It will also free up capital from these surplus vacant properties to invest in new state houses in high demand areas like Auckland and Christchurch.

“There is nothing new in selling surplus vacant state houses, with 1280 being sold during the last Government. The new policy is giving modest income first home buyers preference and gifting them a 10 per cent deposit rather than selling the properties on the open market.”

Dr Smith made the announcement at a three-bedroom FirstHome property in Blenheim which will be placed on the market on 7 October for $160,000.

FirstHome eligibility criteria is that applicants’ must be first home buyers, have an income equal to, or less than, the national household average (one person $53,000, two or more persons $80,600) and be committed to owning and living in the house for a minimum of three years. Housing New Zealand will make a grant of 10 per cent of the property’s market value, up to a maximum of $20,000. Buyers may also be eligible for other home ownership assistance such as the KiwiSaver first-home deposit subsidy and savings withdrawal, and a Welcome Home Loan.

“Housing New Zealand advises that with the high holding costs of these properties with council rates, vandalism and upkeep, the cost of the FirstHome grants will largely be offset. The revenue from the sales will be used to help fund the $2.9 billion record investment in Housing New Zealand’s state housing stock to ensure homes are in the right place, are of the right size and are of good quality,” Dr Smith says.

“The first 41 of these homes will be ready for sale on 7 October and consist of properties from Otorohanga to Invercargill. They have an average market valuation of $120,000. 100 properties will be available in the first year, with about 400 available for sale over the next three years.

“The properties available for FirstHome are those that are vacant and unlikely to be required for eligible state house tenants because of their size and location.”

This new initiative is a small part of the Government’s broader programme of measures to help families get into their first home. Action is being taken on freeing up land supply, reforming the Resource Management Act, reigning in council development charges, scrutinising building material costs, reducing compliance costs, and improving productivity in the construction sector. The Government has also made changes that will double the number of people eligible for a KiwiSaver first-home deposit subsidy and treble the number of people receiving a Welcome Home Loan, effective from today.

“My first home was an ex-state house. They are solid, well-built and many are well suited for renovation and home improvement. I welcome being able to help hundreds of other New Zealanders get onto the first rung of the property ladder,” Dr Smith says.

1. Questions and Answers.

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FirstHome Questions and Answers

1. Who is eligible for the FirstHome initiative?

To be eligible for the FirstHome initiative the applicant must:

Be aged 18 years or older. Be a New Zealand citizen or permanent resident. Be a first home buyer and not currently own property or land (previous home owners may be eligible for the initiative if their income, assets and liabilities represent a financial position that would be expected of a person who has never owned a property, as well as meeting the other FirstHome criteria). Be planning to live in the house for at least three years and not purchase it for investment purposes. Have not received a FirstHome grant before. Have a gross annual income of $53,000 or less (before tax) for one applicant, or a combined gross annual income of $80,600 or less (before tax) for two or more applicants (earned in the past 12 months). Be pre-approved by a certified lender and hold a valid pre-approved letter or certificate that shows the maximum amount that can be borrowed.

2. What do buyers need to do?

Check they are eligible for the FirstHome initiative by completing a self-assessment online or calling Housing New Zealand free on 0508 935 266. Obtain pre-approved finance from a certified lender. Apply to Housing New Zealand for a FirstHome grant and obtain an approval certificate. Contact the participating real estate agent in the area they are looking to buy for a list of properties for sale. A list of agents can be found by visiting www.hnzc.co.nz or by calling Housing New Zealand free on 0508 935 266. Once they have found a suitable home they would like to buy the real estate agent will guide them through the purchase process. Sign a Sale and Purchase Agreement with Housing New Zealand.

3. Are the properties stand-alone houses or units?

The properties for sale through the FirstHome initiative are a mixture of stand-alone and twin unit houses.

4. Will property values be affected in the areas where the houses are being sold?

The houses will all be sold at market value. Properties will be released on the market as they become available and Housing New Zealand will do this in a planned way so that the market is not flooded.

5. Where are the first initial properties to be available on 7 October located?

The first 41 properties available for sale at implementation on 7 October are located across the country from as far south as Invercargill to Otorohanga in the central North Island.

These numbers are indicative only and based on the pool of currently tenanted properties with a future use code of ‘short sell’. The distribution of properties selected for the initiative will depend on which properties become vacant, whether there have been any changes to local demand, whether the property would be difficult to sell in a conventional manner, and the amount of maintenance required to the property.

6. Why is Housing New Zealand selling its empty houses?

Housing New Zealand regularly reviews its portfolio of 69,000 homes to ensure its properties are in the right place, and are of the right size. Properties that are identified as no longer appropriate, due to location, configuration and demand, are selected for divestment as Housing New Zealand incurs significant costs to keep them maintained. A selection of vacant properties has been made available for sale through the FirstHome initiative to support first home buyers, and eligible previous home owners, to achieve home ownership.

7. What is the difference between this initiative and the Tenant Home Ownership Scheme?

The Tenant Home Ownership Scheme is designed specifically to help tenants buy the home they live in. Since the programme started in September 2009, more than 117 state houses have been sold to tenants, with a total value of around $26,963,000.

The FirstHome initiative is designed to support provincial first home buyers who meet the FirstHome eligibility criteria to buy a property that has been selected for sale through this initiative.

8. Can a Housing New Zealand tenant use the FirstHome grant to buy the state house they live in?

No. We are only selling vacant properties that have been identified for sale, which no longer meet state housing needs due to location, configuration and demand.

9. Why is Housing New Zealand selling houses when there are still people on the waiting list for a state house?

The properties Housing New Zealand is selling under the FirstHome initiative are in areas where there are more properties than demand or the properties they have are not the right type for people on the waiting list. Selling these properties enables Housing New Zealand to reinvest in areas of high demand, so it can house more people in need.

10. How does Housing New Zealand select properties for the FirstHome initiative?

Housing New Zealand identifies houses for sale that are not the right type or in the right location for state housing demand. They then look at these properties to see if they are suitable for the FirstHome initiative and consider whether they are an affordable price, in a condition suitable for first home buyers, and the location they are in.

11. How long will Housing New Zealand hold the property open for a first home buyer before releasing it to the general market?

The property will be reserved for a first home buyer for a period of three months. After this time the property will continue to be available through the scheme, but will also be placed for sale on the open market.

12. Won’t speculators just buy and sell the houses for a quick profit?

Buyers using a FirstHome grant will be required to live in the house they buy for three years – specified in the Sale and Purchase Agreement signed with Housing New Zealand.

ends

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