HomeStart off to successful start

The number of first home buyers accessing Government support for making a deposit on a house has doubled since the Government’s new KiwiSaver HomeStart package took effect on 1 April this year, Building and Housing Minister Dr Nick Smith said in releasing the first quarterly report today.

“KiwiSaver HomeStart is off to a strong start with 6788 applications in the first quarter to June, of which 2011 have been approved, 1740 pre-approved and another 2016 are in the process. We have paid out $7.2 million in grants to assist 2011 people into 1195 homes,” Dr Smith says.

The HomeStart scheme came into effect 1 April and replaced the KiwiSaver First Home Deposit Subsidy. It provides grants of up to $10,000 for the purchase of an existing home, and grants of up to $20,000 for the purchase of a newly-built home. The $435 million scheme has been projected to help 90,000 people over the next five years.

“HomeStart is the most generous scheme to support first home buyers since the 1970s where there were State Advances loans and when families could capitalise the family benefit. It makes home ownership an achievable goal for tens of thousands of people on middle incomes, with the combination of KiwiSaver, HomeStart and the Welcome Home Loans,” Dr Smith says.

“There have been difficulties for Housing New Zealand dealing with the rush of applications that resulted in some applications being processed too slowly. The performance agreement with Housing New Zealand is for applications to be processed within 10 working days, but this stretched out to 20 days in May. Housing New Zealand is now meeting the 10 day target with the support of extra resources and staffing.”

The report released today also covers other home ownership assistance products including the Welcome Home Loan scheme, which was also revised on 1 April and resulted in a record 617 new approvals this quarter. The two schemes that help enable the purchase of state houses, the Tenant Home Ownership scheme and the FirstHome scheme, have also assisted 434 families in owning their own home since they were introduced.

“I have not been able to include in this first quarterly report the information on how many and what funds have been withdrawn from KiwiSaver accounts for home ownership. This data requires information from all KiwiSaver providers and will be included in subsequent reports," Dr Smith says.

“HomeStart is one part of a wider programme of work the Government has underway to help more people into owning their own home. We are freeing up more land faster through our eight Housing Accords and 118 Special Housing Areas. We have initiatives in place to constrain building materials costs, rein in development contributions, cut compliance costs and invest in improved sector productivity. We also have new tax measures coming into effect on 1 October to ensure people who invest in housing pay their fair share of tax, and tighter LVR rules for investors in Auckland from the Reserve Bank that come into effect on 1 November.

“I have been very encouraged by the response to 17 public meetings held around New Zealand on the HomeStart scheme and will be doing more. People are surprised to learn that if they are in KiwiSaver for five years on the average wage with no other savings, they can, with HomeStart, pull together a 10 per cent deposit, be eligible for a Welcome Home Loan, and afford a modest home.

"There is still work to do in ensuring young aspiring homeowners around New Zealand know the support that is now available to buy their first home.”