Are you a first home buyer looking to purchase property?
We can help guide you through the process and ensure everything goes smoothly – contact expert property lawyer, Wade Hansen today to set up an appointment.
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13 March, 2018 | Wade Hansen
HomeStart Grant money comes directly from the NZ Government (via Housing New Zealand) and NOT from your KiwiSaver provider and therefore not from your KiwiSaver account. HomeStart Grants are given in addition to any KiwiSaver First Home Withdrawals.(link)
In order to be eligibile for the HomeStart grant, you will need to:
For more eligibility information including how asset values apply, visit Housing New Zealand’s eligibility checklist. In addition, first home buyers must intend to purchase a property in their personal name(s), rather than that of a family trust or other shared fund.
If you have previously owned property, but do not own property now, you may still be eligible for a HomeStart Grant.
You will need to be deemed by Housing New Zealand as being in the same financial position as a first home buyer. To find out if you qualify, simply fill in the extra section on realisable assets in the standard HomeStart Grant Application Form.
To be eligible for a HomeStart Grant you will need to purchase a property below the regional caps set on purchase prices, which vary by region to reflect property values.
When buying land only, the cost of the land added together with the cost to build the house must be lower than the property cap for that region.
Regional limits are set out as follows:
$600,000 (existing properties) and $650,000 (new builds) for Auckland
$500,000 (existing properties) and $550,000 (new builds) for Christchurch City, Hamilton City, Hutt City, Kapiti Coast, Nelson City, Porirua City, Queenstown Lakes, Selwyn District, Tasman, Tauranga City, Waimakariri, Wellington City, Western Bay of Plenty and Upper Hutt
$400,000 (existing properties) and $450,000 (new builds) for the rest of New Zealand.
The KiwiSaver Home Start Grant is in addition to any funds you withdraw from your individual KiwiSaver Fund, and the amount you will receive is not dependent on how much you have saved (as long as you meet the eligibility criteria). How much you receive is affected by how many years you have been contributing to KiwiSaver.
As the Government wants to incentivise the building of additional homes, the grant is larger if your first home is going to be a “new build” (compared to buying an existing house).
For the purchase of an existing home, the new grant offers a minimum of $3000, and up to a maximum of $5,000 to individuals and $10,000 to couples. In the case of building or purchasing a brand new home, this doubles to a minimum of $6000, and a maximum of up to $10,000 for individuals and $20,000 for couples.
Most properties require a 10% deposit to be paid directly to the person selling the property via the real estate agent on the date the sale goes unconditional (or on Auction day). This is known as the purchase or real estate agent deposit (and is different from the “deposit” required by a bank). A KiwiSaver HomeStart Grant cannot be used to pay this deposit as the funds will not be received until settlement day. You will need to organise alternative funds to cover this.
The HomeStart Grant recognises a new build as any of the following:
For example
If you are buying a section in Henderson Valley for $199,000, the fixed price building contract would need to be for $451,000 or less.
The HomeStart grant is administered by Housing New Zealand, and applications need to be made to Housing New Zealand (NOT to the KiwiSaver fund provider)
You as purchaser can make this application yourself on the Housing New Zealand website at www.kiwisaver-homestart.co.nz
However, if the property is a “new build” it is a good idea that the your solicitor reviews the agreements and contracts with a mind to the requirements of the application (prior to you signing and contracts)
In addition to the application form, you will need to supply the following supporting documents:
Further details on how to access this information can be found here
We recommend that you apply for pre-approval. Pre-approvals are valid for 6 months, after six months you will need to re-apply.
If you have pre-approval, you need to allow a minimum of 10 working days prior to settlement date.
Without pre-approval, Housing New Zealand requires a minimum of 20 working days (4 weeks) to process applications.
It is therefore imperative that all agreements relating to the purchase are negotiated in regards to these timeframes (finance conditions for example)
The most important thing to be aware of when using a KiwiSaver HomeStart Grant is to be careful with the dates in your agreement and when you are applying for the grant.
If the funds have not arrived from Housing New Zealand in time for settlement, they cannot be used towards the purchase. In this situation you cannot get a loan from somewhere else to cover the shortfall (for settlement) and then use the HomeStart Grant to repay that shortfall loan. You may end up forfeiting your right to the HomeStart Grant funds forever.
If the KiwiSaver Grant funds have not arrived from in time for settlement you are still legally obligated to continue with the purchase. You will need to cover any shortfall, any delay in settlement will make you liable for settlement delay penalty fees and if you are not able to cover the shortfall, you will be liable for breach of contract.
1) Apply for pre-approval
2) If you have pre-approval, allow at least 10 working days to satisfy the finance condition
3) If you do not have pre-approval, allow at least 20 working days to satisfy the finance condition
4) Allow at least 10 working days from the date the agreement goes unconditional until settlement date
5) Get your property lawyer to review the Agreement for Sale & Purchase BEFORE you sign, to ensure everything aligns with your KiwiSaver requirements.
22 February, 2012 | Wade Hansen