First Home Grant

Published on: 11 October 2022
Under: Residential Property, General, News

If you’re a first-time home buyer, or a previous homeowner and you’ve been making regular KiwiSaver contributions for 3-5 years, you may be eligible for a First Home Grant of up to $5,000.00 for an existing home and $10,000.00 for a new home. This is per person!

Below we outline what considerations and pitfalls there could be if you don’t get the right advice and guidance. It can be quite daunting if you’re trying to navigate this yourself. But fear not, we’re here to help you through this exciting time in your life.

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 ($95,000 or less before tax for an individual buyer (no children) or $150,000 or less before tax for 2 or more buyers, or for an individual buyer with children).
not currently own any property, this does not include ownership of Māori land
have been contributing at least the minimum amount to KiwiSaver (or complying fund or exempt employer scheme) for 3 years or more (the 3 years don’t have to be consecutive, as long as they add up to 3 years’ worth of contributions). The minimum amount is currently 3% of your total income, or $1,000 annually, whichever is the lowest
purchase a property that is within the regional house price caps $650,000.00 for an existing property (received Code Compliance Certificate more than 12 months ago), and $875,000.00 for a new property (Nelson/Tasman)
Note: 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.
agree to live in your new house for at least 6 months from settlement/issue of Code Compliance Certificate.

You must also provide evidence that you have a deposit of at least 5% of the purchase price of the house you want to buy or build

Your 5% deposit can be made up from:

your KiwiSaver first-home withdrawal
your First Home Grant approval/pre-approval amount
savings in the bank
what you’ve already paid towards the property
a gift from a close family member. Gifted money will require a gifting certificate that Kainga Ora provide.

If you’re buying land to build on, you must have a First Home Grant preapproval in place before you purchase the land. You’ll need to allow 4 weeks for your pre-approval application to be processed – see below.

You will need to:

submit your application at least 4 weeks before the settlement of the land
have plans to build or relocate a home immediately after grant preapproval
have a signed sale and purchase agreement for the land
provide a signed, fixed-price building contract that shows the cost of construction and estimated start and finish dates
provide copies of all relevant associated documents such as house plans and property specifications
have enough money to complete the construction of the property within the relevant house price cap.

If you don’t have a fixed-price building contract because you are doing a self-build or partial build, you will need to provide a quantity surveyor’s report showing the total build cost.

The house must be:

a permanent residential dwelling. Transportable properties like motor homes, caravans or similar are not eligible for the grant
your primary place of residence for at least 6 months from the date the code compliance certificate is issued.

The total combined cost for the land purchase and the house construction must be within the relevant house price caps as noted above.
The land must be ready to build on. If it’s not, the cost to get the land ready for building must be taken into consideration.

If you’re buying a property off the plans you will need to:

live in the house or apartment for at least 6 months from when the property has been completed to compliance standards and settlement concluded
provide copies of the house plans and property specifications
provide a copy of the signed contract that shows:
o the details of the proposed property
o the purchase price
o projected dates for the start and end of construction, including a sunset clause.*

When you buy off plans, we may be able to have your grant paid before settlement to help you with the initial payment or a progress payment. In these cases, the grant must be held in trust, in escrow* or similar arrangement, with payment to the developer only on settlement. You will need to discuss this with your lawyer and the developer.

You can apply for either a:

pre-approval before you start looking for a property to buy – this gives you certainty around eligibility and how much you may qualify for or;
grant approval if you’ve found a property and have a signed sale and purchase agreement.

To take the guess work out its recommended you apply for pre-approval. This will also speed up the process for you. The pre-approval is generally valid for valid for 6 months. But if you have not bought a home in that time you will need to reapply.
If you have made a successful offer on a property and don’t have a pre-approval, you need to apply for a First Home Grant at least 4 weeks before the day of settlement.
The process may seem dauting to you as you read through it but fear not, we’re here to help. Contact one of our team and we’ll make an appointment time to help you through.

Terminology
Sunset Clause – A clause inserted into an agreement to give either the Vendor or Purchaser the right to cancel the agreement if a condition has not been met by a certain date.

Escrow – A grant that would be held by a third party (usually the lawyers trust account) and can only be released to the developer or builder, depending on what the payment is for.

To help you navigate through buying your first home, reach out to one of our specialist team members.