Homestart rules catch buyers out

A small number of first-home buyers are being caught out by the rules attached to government deposit grants.

Housing New Zealand has released data that shows it has given a deposit subsidy or Homestart grant to 63,500 firsthome buyers since July 1, 2010 – when people first became able to use their Kiwisaver funds to help them buy a home.

The subsidy, replaced by the grant scheme in 2015, offers buyers a cash deposit top-up if they meet income and house price caps, which vary around the country.

Housing NZ, which administers the Homestart scheme, said there had been 117,000 applications since July 2010, of which 20,000 deposit subsidy and 43,5000 Homestart grants had been approved.

A couple can access up to $20,000 between them if they are buying a property that is being built new – and half that for an existing home.

Four thousand grants were approved in the July to September quarter of 2017.

Just 24 grants, worth a combined $123,000, had been required to be paid back since the Homestart grant came into effect in 2015.

In most cases, that was because the purchaser broke the rule that requires them to live in the property for at least six months before renting or selling it.

In other cases relationships split, sometimes pushing the purchaser over the income cap. A couple can have a joint income of up to $130,000 to qualify but a single person only $85,000.

The largest repayments were of $10,000 grants – there have been four at that level repaid since 2015.

These figures do not include people who have had to pay back their grants because a purchase did not proceed.