Is shared home ownership right for you? Kāinga Ora First Home Partner
If you are finding it difficult to save money for a deposit, know that you are not alone.
The New Zealand Government’s Progressive Home Ownership Fund can make your dream of owning a house a reality. In this article, we focus on the shared ownership scheme run by Kāinga Ora, through First Home Partner.
The scheme is a great way to assist you in buying a home if your deposit and bank loan are not enough.
In order to get started, you need to submit your application through the First Home Partner Portal to check your eligibility and obtain pre-approval. It will take up to 5 working days for your application to be processed.
Below are the criteria to be eligible for Kāinga Ora First Home Partner:
- You must be over 18 years old.
- You must be a NZ citizen, permanent resident, or ‘ordinarily resident.’
- You must have 5% deposit.
- You must have a total household income of not more than $150,000.00 before tax.
- You must meet the bank or lender’s lending requirements.
- You must live in the house for at least three years from the date of settlement.
- You must have a good credit rating.
- You must be a first home buyer or in a similar financial position.
- You must have not previously received shared ownership support from Kāinga Ora.
A full approval is subject to Kāinga Ora’s final assessment, which will be processed after you obtain a home loan pre-approval from a participating bank (Westpac, BNZ, Kiwibank and SBS Bank) and find a suitable home.
Finding a suitable home can be challenging as not all homes are eligible for First Home Partner. The house you are considering purchasing must meet the following criteria:
1. The home is a new build with a Certificate of Code Compliance issued in the last 12 months; OR
- Off-the-plan houses (it is important to note that First Home Partner does not support scheduler payments or construction loans and the house and land must be purchased together on a single Sale and Purchase Agreement); OR
- Existing home with minimal house maintenance under $5,000.00 to be determined by an independent valuation and property inspection report (valuer must be registered/approved by the lender; further criteria can be found in the Property Statutory Declaration form.
2. Must have the minimum required bedrooms as indicated in your conditions of eligibility; and
3. Have a total purchase price within the indicative amounts provided as part of your conditions of eligibility.
Is shared ownership right for you? Let’s lay out the good and the bad and see where we get.
| 👍 | Good | 👎 | Bad |
| It can be easier to achieve than full ownership | Kāinga Ora will have a say in the purchase process before you make an offer to buy a house, i.e. due diligence process, reviewing the sale and purchase agreement. This process can take time. | ||
| You only need a minimum of 5% of the purchase price as a deposit compared to 20% deposit requirement of most banks and lenders | You will need to satisfy the lending criteria of a participating bank | ||
| The maximum contribution Kāinga Ora will make towards a home purchase is 25% or $200,000 – whichever is lower | Kāinga Ora will share ownership of the home with you as co-owner on the title.
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| If eligible for First Home Grant, you can get up to $5,000 to put towards the purchase of an existing or older home or up to $10,000 for a brand-new home | If buying off the plan, the house must be completed before settlement occurs | ||
| You may be able to withdraw your KiwiSaver if you have been a contributing member for at least three years | You cannot purchase an existing home at an auction
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| No house price caps, the value of the property you purchase will be determined by your deposit | You may not be eligible for First Home Grant, if the value of the property you purchase exceeds the house price caps | ||
| There is no minimum income required to purchase a home | Your total household income before tax should be no more than $150,000.00 | ||
| You must meet annually with a Kāinga Ora Relationship Manager | You must meet annually with a Kāinga Ora Relationship Manager | ||
| Kāinga Ora do not use or occupy your home. | You cannot rent out your home | ||
| You can purchase Kāinga Ora’s share either in small increments or one lump sum | Not all lenders participate in the shared ownership scheme offered by Kāinga Ora | ||
| You agree to purchase Kāinga Ora’s share in full within 15 years (or maximum 25 years) | Kāinga Ora may charge you a Service Fee to cover reasonable costs if you have not purchased their full Share by the 15th Anniversary Date. | ||
| You can sell the property on the open market | Kāinga Ora has the “first right of refusal” to buy out your share in the property before you can sell the property on the open market | ||
| If you want to carry out renovations or improvements, you must first obtain approval from Kāinga Ora | |||
| You pay for all outgoings in respect of the property, insurance premiums and excesses, and the cost of selling the property | |||
Shared ownership is an affordable path to homeownership for those who want to escape sky-high rental costs and get on the property ladder. We recommend that you visit the Kāinga Ora website for further information https://kaingaora.govt.nz/home-ownership/first-home-partner/
If you would like to discuss this option further and how we may be able to help, please feel free to contact a member of our property team.
Authors
Car San Diego & Abbie Chaytor