Progressive Home Ownership

Today, 24 July 2020, the Minister for Housing and Urban Development announced a new Progressive Home Ownership Scheme. The Minister named the Housing Foundation in Auckland and Queenstown Lakes Community Housing Trust as the first providers of the Scheme (given housing affordability issues are most severe in these areas).

The Scheme aims to give low to median income families a pathway towards owning their own homes. The Scheme will aim in particular to address affordability issues for Maori, Pacific people and families with children.

The Scheme can take several forms, including:

• Shared Equity or Ownership – where a family owns part of the home and a third party owns the rest. Over time the household buys back the portion of the home from the third party (e.g. housing provider or the Crown).  
• Rent to Buy – where the provider purchases a house outright and a family rents that home from the provider (possibly at below market rates to enable the family to save a deposit). Alternatively, a standard market rent could be charged with the provider setting aside a portion of that rent as a deposit on behalf of the family. The family may have the right to purchase the home either outright or through a shared equity scheme. 
• Leasehold – where a provider sells a home to a family but retains ownership of the land. The exclusion of land from the purchase lowers the deposit and servicing cost for the family. The homeowner may be required to pay a ground rent to the landowner for ongoing use of the land. Here, the family may have the right to purchase the land from the provider at a later date, once the family is able to afford it.

Criteria for funding includes:

• applicants must be over the age of 18;
• applicants must not currently own any property in New Zealand or overseas;
• applicants must be a New Zealand Citizen, Permanent Resident, or Resident Visa Holder who is 'ordinarily resident in New Zealand';
• applicants must have a household income of under $130,000 per year;
• applicants need to be first home buyers or ‘second chancers’ (as defined in the eligibility criteria for KiwiBuild); and
• applicants will need to be able to secure a commercial mortgage (i.e. good credit histories, minimal debt), and have saved some amount of deposit.

The government expects the Scheme to help between 1,500 – 4,000 households and has earmarked approximately $400 million for the Scheme.

If you have any questions about the scheme, or are considering purchasing a property in the near future, do not hesitate to contact one of the TODD & WALKER Law Property team members:
Principal Graeme Todd on [email protected]

Principal Peter Sygrove on [email protected]

Associate Ben King on [email protected]