A raft of changes to KiwiBuild have been announced by the Government in an attempt to keep the flailing scheme above water, with first home buyers also reaping a drop to deposit requirements from 10 to five per cent.
The highly anticipated reset has been marred with months of delays after a series of issues that led to questions around KiwiBuild's long-term feasibility.
Labour's key election promise to build 100,000 homes has been scrapped, with Housing Minister Megan Woods admitting it was "overly ambitious" and saw contracts signed in places with little first home buyer demand.
"KiwiBuild isn't working, so we're changing it," Ms Woods said.
Changes for first home buyers:
- Government backed deposits for first home loans reduced to five per cent from 10 per cent
- Progressive home ownership schemes
- Shared equity or shared ownership
- Rent to buy
- Limit of earnings removed for First Home Grants so multiple buyers could be eligible to combine grants for a home.
Shared equity entails a third party owning part of the property and rent-to-buy scheme would see a portion of rent set aside to build up equity or a deposit for the home either outright or through the shared equity scheme.
The $400 million investment in new home ownership schemes is being welcomed, but some say it lacks detail.
Changes to KiwiBuild:
- 100,000 home target scrapped
- Studio and one-bedroom KiwiBuild homes commitment lowered from three years to one
- Up to 10 per cent of KiwiBuild homes can be over price cap if four bedrooms or larger
- Government underwrite reduced
The removal of the 100,000 target came after the Government fell significantly short of its June 2019 target of 1000 homes - with only 258 homes completed as of yesterday. The interim targets were discarded earlier this year.
"Homes in Te Kauwhata, Canterbury and Wanaka that haven't sold will be released to the open market, allowing us to reuse the Government capital to get more developments underway where there is clear demand," Ms Woods said.
Changes to the Government underwrite, triggered if the KiwiBuild home fails to sell within 60 days, will see the amount Government pays to developers decrease - "so developers are incentivised to sell to KiwiBuild first home buyers".
First home buyers
$400 million has been set aside from KiwiBuild to go toward a progressive home ownership scheme "to help more people buy their own home", Ms Woods said.
Shared equity entails a third party owning part of the property and rent-to-buy scheme would see a portion of rent set aside to build up equity or a deposit for the home either outright or through the shared equity scheme.
It was expected between 2,500 and 4000 households could come under a progressive home ownership scheme.
"We will also be reducing the deposit required for a Government-backed mortgage to five per cent and changing policy settings so that family and friends can each use their $10,000 First Home Grant and their KiwiSavers to buy their first home together."
"This new scheme will help struggling families buy a share of a house, reducing both the deposit needed to get a mortgage and their repayments.
"We will now out rolling out progressive homeownership schemes, and supporting community housing providers and iwi," Green Party co-leader Marama Davidson said.
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