Home Start Great, But FHBs Should Be Exempt From Bright-line Test
“Updating the Home Start grant is long overdue, but it’s better late than never and will be well received by many desperate first-home buyers,” says Derryn Mayne, Owner of Century 21 New Zealand.
Derryn Mayne, Owner of Century 21 New Zealand
Her comments follow the Government today announcing some key housing initiatives.
As well as committing nearly $4b into accelerating the pace of new builds, the Government announced it would lift the bright-line test from five years to 10 years for existing homes. This means any capital gains on a residential property that is not a family home will be taxed if the property is sold within 10 years of purchase.
Ms Mayne says she has no issue with the bright-line being extended to 10 years but strongly believes it should exclude all first-home buyers purchasing investment properties.
“For years I've been telling homeowners that if they can't afford to buy where they want to live, then rent where they want to live and buy an investment property in another area. First-home buyers should be allowed to do that and not be taxed like property investors because for many that’s the only way they can get into the market,” she says.
The Home Start subsidy scheme enables qualifying first-home buyers under certain income caps to receive a grant to purchase property under set regional price caps.
From 1 April, both the income and house price thresholds will be lifted, making more first-home buyers eligible for Home Start.
“Century 21, along with REINZ, has long been calling for the Home Start grant to be updated and made fit for purpose. As the market rocketed, we saw fewer and fewer properties and first-home buyers qualify, which was killing the Kiwi homeownership dream for many,” she says.
The Century 21 leader says eligibility in Auckland in particular, became almost impossible.
In the 12 months to February, Auckland’s median house price increased by 24.3% to $1,100,000, according to REINZ’s latest figures. Yet for first-home buyers in Auckland to qualify for Home Start they needed to buy an existing property for $600,000 or less, or $650,000 for a new build.
Last year REINZ revealed that only 12% of Auckland properties sold were below the Home Start price cap threshold. That number would’ve only reduced since.
“In many ways the market has run away from first-home buyers. While these adjustments to Home Start won’t be enough for some people, it’s definitely a step in the right direction and will undoubtedly enable more young Kiwis on the property ladder.
“Given interest rates have never been lower, now’s the time to enable and encourage as many first-home buyers into property as we can. After all, homeownership makes such a positive difference to people’s futures,” says Derryn Mayne.