The Kainga Ora First Home Grant
You may have heard there is a grant available from the government to help you buy your first home if you are a KiwiSaver member. This is the Kāinga Ora First Home Grant. What does Kāinga Ora mean? Wellbeing through places and communities.
Who is eligible?
To be eligible for a First Home Grant, you must:
be over 18
have earned less than the income caps in the last 12 months
not currently own any property
have been contributing at least the minimum amount to KiwiSaver (or complying fund or exempt employer scheme) for 3 years or more
purchase a property that is within the regional house price caps; and
agree to live in your new house for at least 6 months.
Previous homeowners in New Zealand or overseas may apply for the First Home Grant. You can only receive the First Home Grant or its predecessors, the KiwiSaver HomeStart grant or KiwiSaver deposit subsidy, once.
Is the grant a set amount?
There are different grant amounts for different property options.
Buying an existing home…
If you buy an existing home, you can get $1,000 for each of the 3 (or more) years you've paid into the scheme. The most you can get is $5,000 for 5 or more years.
Therefore: 3 years - $3,000.00
4 years - $4,000.00
5 or more years - $5,000.00
Buying a new home or land…
If you buy a new home or land to build on, you can get $2,000 for each of the 3 (or more) years you've paid into the scheme. The most you can get is $10,000 for 5 or more years.
Therefore: 3 years - $6,000.00
4 years - $8,000.00
5 or more years - $10,000.00
What is the income cap?
For your income requirements you must have earned in the last 12 months:
$95,000 or less before tax for a individual buyer
$150,000 or less before tax for a individual buyer with one or more dependents
$150,000 or less before tax for 2 or more buyers, regardless of the number of dependents.
Do I need to have any of my own savings?
With your application you must provide evidence that you have a deposit of at least 5% of the purchase price of the house you want to buy or build.
This deposit can be made up of:
Your KiwiSaver first-home withdrawal- your pre-approval letter will confirm amount
Your First Home Grant pre-approval amount
Money that you have saved in the bank
Any money you have already paid towards the property like an initial deposit
Money gifted by a close family member (you will need to get a completed declaration signed)
Can I buy any house I want to?
The First Home Grant can be used to help purchase new builds or existing properties up to the value of the price caps in your region.
New build properties include:
Newly built dwellings that received a building code compliance certificate less than 12 months before the date you apply for the First Home Grant
Vacant sections that will be built on
House and land packages or apartments purchased off the plans
If you're buying land to build on, you must have a First Home Grant preapproval in place before you purchase the land.
Existing properties are any houses that were built and certified more than 12 months ago.
If you buy privately (not through a real estate agent), you may need to provide evidence that you have paid a fair market price, for example a registered valuation.
House price caps
Auckland : Existing/older properties $875,000 New properties $875,000
Queenstown Lakes District: Existing/older properties $875,000 New properties $925,000
Hamilton Urban Area, Hamilton City, Waipa District, Waikato District: Existing/older properties $650,000 New properties $775,000
Tauranga Urban Area, Tauranga, City, Western Bay of Plenty District : Existing/older properties $800,000 New properties $875,000
Wellington Urban Area, Kāpiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City: Existing/older properties $750,000 New properties $925,000
Christchurch Urban Area, Waimakariri District, Christchurch City, Selwyn District: Existing/older properties $575,000 New properties $775,000
Dunedin City: Existing/older properties $500,000 New properties $675,000
Further regions can be found here: House Caps
Regions are defined by city and district council boundaries.
Can I use the grant as part of my deposit for the property?
If you are purchasing an older/existing property, land on which you are to build a home or a newly completed/built home your grant is paid to your conveyancing professional on the morning of settlement, and can only be applied to your purchase on settlement day. The grant cannot be paid out after settlement has occurred.
If you are buying a property off the plans, the grant can be paid out to support the first payment that you make under that specific agreement, for example the deposit payable to secure the property or any progress payments. In these cases, the grant must be held in trust by an independent stakeholder with payment to the vendor (developer) only on settlement, therefore it is important this has been agreed to as a further term within your sale and purchase agreement prior to both parties signing.
If you are purchasing land to build but currently do not have a fixed build contract, you must have grant preapproval in place before you purchase the land (submit your application at least 4 weeks before the settlement of the land). The preapproval will last six months. You may settle on the land without having a fixed price build contract; however, you need to provide a signed copy of the fixed price build contract, as well as a signed copy of the sale and purchase agreement for the land, before your grant preapproval expires, or you will not be approved for the grant. The grant will be paid upon the issue of the code of compliance certificate.
If you're building on Māori land, you will need to provide a copy of your right to occupy Māori land.
When do I need to apply for the grant?
There are timeframes and multiple documents requiring your attention in order to obtain pre approval, approval, cover sheet and then signing of your agreement with Kāinga Ora. This why it is extremely important to discuss if you are intending to apply for the Kāinga Ora First Home Grant with your conveyancing professional as early as possible, as you want to make sure your application is submitted for consideration at least four weeks prior to settlement or deposit date (for off the plans purchases).
For more information visit the Kāinga Ora First Home Grant website below or let me know if you would like some information on this.
Please click here to obtain a free copy of our Kāinga Ora First Home Grant Checklist, another great resource to help you on your way!
Jo Shannon is the founder of Nest legal & conveyancing. A Conveyancing Practitioner Jo lives with her family in the beautiful Bay of Plenty. Apart from all things property, Jo also loves perma-culture gardening, walking round the Mount and nice wine.