Thinking about buying your first home?

Thinking about buying your first home? Kāinga Ora may be able to help.

Buying your first home can be an exciting step for you and your family, but it can also be overwhelming with so many things to consider. After all, this purchase will likely be the biggest of your life to date. Getting your deposit sorted is the crucial starting point, and Kāinga Ora has some assistance packages that may be relevant to you.

Kāinga Ora's First Home Partner scheme

Kāinga Ora's First Home Partner shared ownership scheme is part of the New Zealand Government's Progressive Home Ownership Fund. It's designed to provide first-home buyers with an opportunity to co-purchase their own home with Kāinga Ora if they only have a 5 per cent deposit and satisfy other eligibility criteria.

The amount you can borrow is determined by the following factors:

1.    The amount you already have for the deposit

2.    The amount approved by the lender

3.    Kāinga Ora's contribution toward your purchase

The applications are assessed on a case-by-case basis, but there are minimum requirements that you must satisfy.

• You should have a minimum contribution of 5 per cent toward the purchase price of the home you want to buy. This can be made up from your personal savings, your KiwiSaver, a First Home Grant (if eligible) or even gifted by a family member.
• You will still need to meet the lending requirements of a participating bank and receive a home loan offer.
• The house you are purchasing should be a new build that received the Code Compliance Certificate within the previous 12 months and has not been owned or occupied previously.
• Your net yearly household income should be under $130,000.

Kāinga Ora will make a maximum contribution towards your home purchase of 25 per cent or $200,000, whichever is lower. For example, if you were buying a brand new home for $1 million and had $50,000 available for the deposit, you would need the participating lender to offer to lend you $800,000 and confirmation from Kāinga Ora that they would contribute the balance of $150,000 (being 15 per cent of ownership in the home).

What does 'shared ownership' mean?

Shared ownership means that you will "share" the ownership of the home with Kāinga Ora as co-owner on the title.

You will be the primary occupier of the house and will not need any tenancy arrangement with Kāinga Ora. You are expected to live in your home as your primary place of residence for at least three years from the settlement date, which means that you are prohibited from renting it out or selling it.

You are then expected to purchase the share of the home owned by Kāinga Ora within the first 15 years. You must have bought the share from Kāinga Ora in full by the 25th anniversary of the date of settlement of the home.

Any additions, alterations or renovations should be agreed upon in writing with Kāinga Ora. In addition, any decision to sell or transfer your share in the home to another party will be a joint decision between you and Kāinga Ora.

As with any property, you will be responsible for the proper maintenance and repair. In addition, Kāinga Ora may visit to check the property condition if they have concerns that you are not complying with your maintenance obligations.

At all times, you are responsible for paying the mortgage, rates, and utility bills, and you must always have valid insurance.

The legal aspects of shared ownership with Kāinga Ora

Once Kāinga Ora confirms that your application is approved, it will forward all necessary documents to your solicitor. Your lender will also send copies to your solicitor. You will need to sign a shared ownership agreement with Kāinga Ora Homes and Communities to support the shared ownership of the property.

You will also be required to settle the property in your names as tenants in common with Kāinga Ora. Tenancy in common allows each owner to hold a defined share in the property. Using the above $1 million purchase as an example, this would be 85 shares for you and 15 shares for Kāinga Ora, reflecting the respective financial contributions to the purchase price.

What are the important issues to consider before entering into the First Home Partner scheme?

Entering into shared ownership with Kāinga Ora is a serious legal commitment. We recommend that you only sign the agreement if you fully understand the terms and are comfortable meeting your obligations.

The team here at Turner Hopkins are here to help you. We can provide you with legal advice so that you can make an informed decision about your journey toward home ownership.