Good news for young families, the Kiwibuild programme has been modernised to catch up with reality.
If you’ve only got a second, the main takeaway is that KiwiBuild programme caps have been raised :
The KiwiBuild price cap for one to three bedrooms has been raised to meet the current housing market
Income caps for multiple buyers have been raised by $20,000 - from $180,000 to $200,000 - to reflect the higher cost of Kiwibuild homes.
In addition, a new income cap now exists for individual buyers with dependants. This income cap is $150,000.
As part of its KiwiBuild reset, the new government-announced initiatives have made the reality of owning a property more achievable for first-home buyers. The reset includes:
New ways for people to become homeowners, such as shared-ownership schemes
Boosting supply by building more homes where evidence shows they are needed
Enabling friends and family to join their $10,000 deposit assistance together
Reducing the deposit required for a government-backed mortgage to 5%
Reducing the amount developers receive for triggering government underwrite rather than selling to KiwiBuild buyers
The good news continues with a change for developers of homes for young families to live in. Kāinga Ora – Homes and Communities are responsible for managing the underwriting programme on the government’s behalf. This means that the New Zealand Government will accept the risk and agree to pay any fees/claims that may arise concerning the sale of homes in new residential developments.
The Government’s overall goal is to deliver more affordable homes, and we couldn’t be happier that this goal may now be achievable.
The KiwiBuild price cap for one to three bedrooms has been raised to meet the current housing market, aiming to generate more KiwiBuild homes to purchase. To illustrate this, the price cap for a three-bedroom house in Auckland was $650,000 and has now been raised to $860,000.
Price caps are set to regulate the price (maximum) that a Kiwibuild property can be sold. It is important to note that homes can differ in size and location.
However, this cannot be achieved without participating developers who agree to sell the underwritten homes at or below the Kiwibuild price caps. These homes must first be offered to eligible Kiwibuild buyers.
New Zealand Micrographic Services (NZMS) has already allocated $600 million, which will help build approximately 1,000 KiwiBuild homes for Auckland residential development projects by the end of 2023.
James Kellow from NZMS stated, “If developers have the sites, we will support a partnership with Kiwibuild and provide up to 100% of the developer’s funding requirements.
“Kiwibuild is all about unlocking development potential and bringing forward construction dates, and that is what we’re now putting our hand up for.”
Approximately 1,380 Kiwibuild homes have been built, with about 1,223 currently under construction, most of these financed by NZMS.
There is no question that first home buyers are struggling to secure a first home, so the introduction of the income cap for individual buyers and the increase in the multiple buyers is great to see.
Purchasing a first home can be an exciting and overwhelming time. If you have questions regarding points raised in this article or the ins and outs of buying your first home, let us know. We are here to help.
Written by Jamelle Keatley, Senior Solicitor, iCLAW.
NZ Govt Media release; NZ Govt Kāinga Ora website; NZ Herald; NZ Adviser