First Home Partner is an initiative by Kāinga Ora to help first home buyers with a limited deposit or home loan to buy a brand-new home. Kāinga Ora will own a share in the home equivalent to the percentage they contributed towards the purchase price. The first home buyer will be the majority owner. The majority owner and Kāinga Ora are both on the Title as tenants in common. The majority owner/s then purchases back the Kāinga Ora share within 15 years.
How it works
Kāinga Ora will contribute a maximum of 25% or $200,000.00, whichever is lowest, towards the purchase of a brand-new build. A shared ownership agreement is signed between the majority owner/s and Kāinga Ora. The majority owner/s must live in the home for a minimum of 3 years from the date of settlement. Kāinga Ora must approve any home improvements, renovations, or sale of any part of the home before it can be undertaken.
The majority owner/s are responsible for costs associated with home ownership e.g., rates and insurance. The majority owner/s pay all purchase costs e.g., legal fees and bank fees. The First Home Partner can be used alongside the Kāinga Ora First Home Grant [if you are eligible] as well as the possibility of using your Kiwisaver First home withdrawal.
Kāinga Ora will meet with the majority owner/s annually to review progress on purchasing back the Kāinga Ora share of the property. It is important to note that the Kāinga Ora share value will be calculated on market value of the property at the time of the majority owner/s buy out the Kāinga Ora share. This means that if the market has risen, the amount required to purchase the Kāinga Ora share will increase.
If you decide to sell the home before the Kāinga Ora share has been purchased, Kāinga Ora must agree to this, and the sale proceeds will be split according to the percentage of ownership. For example, if you purchased a home for $600,000 and Kāinga Ora contributed 10% of the purchase price ($60,000) they would have a 10% share in ownership. If then the home was sold for $800,000 the Kāinga Ora share would now be worth $80,000.
Eligibility
To see if you could be eligible for the First Home Partner grant. You must answer yes to the following.
- Are you 18 or over?
- Are you a first home buyer?
- Do you intend to live in the home?
- Are you a New Zealand citizen, permanent resident or resident visa holder? (If no you may still be eligible if you are in a relationship and applying with someone who meets the citizenship requirements).
- Is your total household income $130,000 or less before tax for the last 12 months?
You will need to save a minimum deposit of 5% and be approved for lending by a participating bank.
If you meet the above criteria, you may be eligible and can begin an application for the First Home Partner!
The Process
The first step is to apply online at Kāinga Ora. You will need to provide:
- certified copies of your ID’s
- a summary of your income for the last 12 months from IRD
- bank statements for the last 3 months
- any current deposits you have, and
- a signed copy of the Kāinga Ora statutory declaration.
If your application is successful, you will have pre-approval for 6 months. You must sign a commitment agreement with Kāinga Ora before you can make an offer on any home.
Once you have pre-approval from Kāinga Ora it’s time to talk to the bank and get pre-approval for lending. There is a list of participating banks on the Kāinga Ora website.
Once pre-approved by the bank you can begin looking at homes and make an offer. The offer can only be on brand-new homes, or homes purchased off plans. It is important that any offer made is a conditional offer which includes first home partner conditions, Solicitor’s approval, and a finance condition. We can help with this process and making sure the correct conditions are included in the agreement. Kāinga Ora will need to see a copy of the Sale and Purchase agreement before it is signed to check it meets their requirements. If approved, Kāinga Ora will sign as a co-purchaser.
The next step is signing a Shared Ownership Agreement. This is a very important part of the process as the agreement lays out the obligations and responsibilities for both parties under the shared ownership relationship. Kāinga Ora provides the shared ownership agreement once the agreement for sale and purchase has been signed by both parties. A copy of the shared ownership agreement signed by you must be provided to Kāinga Ora at least 10 working days before settlement.
Once everything is signed it is countdown to settlement! We will help you through this process and ensure everything goes smoothly.
In Summary
The Kāinga Ora First Home Partner is one of several options offered by Kāinga Ora to help with first home buying. It is more complex than other options such as the First Home Grant and the First Home Loan. Kāinga Ora will own a share in the home as opposed to only contributing funds towards the purchase. The shared ownership agreement between Kāinga Ora and the majority owner governs the shared ownership and is a crucial part of the First Home Partner Scheme. It creates rights and responsibilities for both parties. Although the process to homeownership with First Home Partner is more complex than options like the First Home Grant, it could result in a much higher contribution from Kāinga Ora towards the purchase of a new home.
To get further advice or to begin the process contact one of our property specialists.
Jacintha Atkinson-Manson
Director
Christine Allison
Legal Executive
Kirsty Goodall
Legal Executive
