Government recently announced changes to some of the home ownership products and programmes administered by Kāinga Ora – Homes and Communities that will take effect from 15 May 2023. By introducing changes to the First Home Grant, Government hopes to make it easier for first home buyers to build new homes or buy newly built homes. Read on to find out what the changes are as well as the opportunities these changes could present to first home buyers looking to build new or buy new.
What is the First Home Grant?
First home buyers who have been contributing to KiwiSaver for at least 3 years may be eligible for a First Home Grant of up to $10,000 to top up their deposit.
- When buying an existing home, eligible buyers may get $1,000 for each of the 3 or more years they have paid into KiwiSaver, up to a maximum of $5,000 for 5 or more years.
- When buying a new home or land to build on, eligible buyers may get $2,000 for each of the 3 or more years they have paid into KiwiSaver, up to a maximum of $10,000 for 5 or more years.
You can apply for the First Home Grant for a pre-approval before you find a home, or once you have found a home and have signed a sale and purchase agreement. House price caps and income caps apply so it’s important to check eligibility before applying.
What are the changes to the First Home Grant?
Effective 15 May 2023:
- First Home Grant house price caps will be adjusted in several areas to align with the current market.
- The minimum new build house price cap for the First Home Grant will be lifted from $500,000 to $650,000, to reflect the rising cost of construction.
- View the updated First Home Grant house price caps [PDF, 838 KB].
Find out here what the other changes are.
What qualifies as a “new build”?
The First Home Grant recognises a new build as any of the following:
- A vacant residential section on which a new dwelling will be built within specified time frames – there must be a fixed price build contract included in the application
- A house and land package purchased from plans
- A new apartment built from plans
- A newly built dwelling that has received its building code compliance certificate less than six months before the buyer’s application. This does not mean a code compliance certificate issued for renovations/additions.
- The First Home grant CANNOT be used to fund building a dwelling on land that is already owned by the KiwiSaver member.
- If you are buying land, a house and land package or an apartment off the plans, a signed fixed price building contract containing clear construction start and end dates (and a sunset clause) must accompany the application.
- The purchase price of the land + the cost of the build must be less than the regional property cap.
Building a New Home with the First Home Grant
Last year, house price caps on the First Home Grants were increased to align with lower quartile market values for new and existing properties, resulting in a strong increase in grant applications.
The number of grants paid monthly increased from 583 in December 2021 to 1051 in December 2022, while the number of home loans each month rose from 70 to 296 over the same period of time.
It’s hoped that the most recent changes to house price caps will open up more opportunities for first home buyers who may not have considered building a new home instead of buying an existing home.
The benefits of building new include:
- Improved energy efficiency and comfort
- A home that is customised to your requirements
- Fewer running costs
- A bigger boost to your deposit from the First Home Grant
- And an exemption from Loan to Value Requirements (LVR) as determined by the Reserve Bank of New Zealand
Financial solutions for first home buyers
Buying a first home can feel like a daunting process so it’s helpful to know you have someone on your side who can guide you every step of the way, explain the processes and procedures, and ensure you have the information you need to make an informed decision about your finances.
Working with a Mortgage Express branded mortgage adviser can put you in the right position to buy a first home, with advice around saving a deposit, accessing Government support, and getting help from family and friends.
If you’ve got questions about building a new home or buying a newly built home while accessing the First Home Grant, get in touch today so we can help you determine your way forward.
