A new way to buy a first home with shared ownership

In Aotearoa, we are continuing to see exponential increases in house prices and more first home buyers priced out of the housing market. The new shared ownership scheme offered by Kāinga Ora — Homes and Communities is a different approach through which more households can achieve home ownership.

Home ownership can be a daunting prospect and yet remains a dominant aspiration for many New Zealanders. However, not everyone’s journey into home ownership is the same, and not all home buyers require the same level of support. We are finding that many households, especially first home buyers, need a helping hand to guide them through the process and support them into home ownership. However, even with a deposit and pre-approved home loan, some households can find themselves still unable to afford home prices in the current market.

“Aspiring home buyers will always begin their journey at different stages and require different levels of support along the way. Whether this is general advice, a greater understanding of support options available to them, or direct financial assistance,” explains Home Ownership Products Manager Jason Lovell.

“As home prices continue to climb in New Zealand, we are seeing more and more first home buyers priced out of the current market, or unable to put down the required savings for a deposit on a home, even if their household income means they could be able to afford the repayments on a home loan.”

As part of an ongoing effort to provide more options for home buyers, we launched First Home Partner in October 2021. This is a new shared ownership scheme where Kāinga Ora will partner with a household and provide them with an equity contribution toward their home purchase, becoming co-owners of the new home with them.

How shared ownership works

Shared ownership means that instead of owning the home outright, a household initially purchases it with a third party, who takes an ownership stake in return for an equity contribution toward the home’s purchase. The household then buys this share back from the third party — in this case, Kāinga Ora — over time until they are the sole owner.

The make-up of shared ownership with First Home Partner is affected by several factors, including:

• How much of a deposit the buyer has and is able to contribute

• How much a bank is willing to lend as a home loan

• How much of a contribution Kāinga Ora will make towards purchasing the home.

There are eligibility criteria for First Home Partner. Applicants will need to be purchasing a brand new home, not have received previous shared ownership support from Kāinga Ora, earn a household income under $130,000, provide a 5% minimum contribution towards a deposit for the home purchase, and be in a financial position to meet the lending requirements of a participating bank.

“We have worked closely with Westpac and BNZ to help shape and design First Home Partner to be relevant and accessible to aspiring buyers, and both banks are on board as foundation supporters of the scheme. We are grateful for their ongoing expertise and support in bringing First Home Partner to the market,” says Mr Lovell.

Through First Home Partner, we can offer a maximum contribution of 25% of the purchase price or $200,000 towards a home purchase — whichever is lower. This is assessed case-by-case for each applicant to reflect their personal circumstances and the type of home they are looking to buy that best suits their household.

Supporting more New Zealanders into owning their own homes is a collaborative effort across Government and business, and the first home partner scheme is a new and exciting addition to the products and services that Kainga Ora can offer to help kiwis achieve their aspirations of home ownership

Helping first home buyers become full homeowners

We want households to succeed in their goals and become full home owners as soon as practically achievable. First Home Partner is unique because our equity contribution is not a loan, does not have annual fees for the first 15 years of ownership, and is not interest bearing. Our relationship with the household also doesn’t stop at moving day. We work with the household through a Goals Management Programme as long as we remain co-owners in the home.

The programme is designed to help support the household to stay on track with becoming a full home owner. It includes guidance for buying the share back from Kāinga Ora, maintaining the home, and assessing any changes in the household’s personal or financial circumstances to help make sure goals remain achievable.

Multiple pathways into home ownership

There isn’t a one-size-fits-all approach to achieving home ownership. First Home Partner joins a suite of other products available for first home buyers that include the First Home Grant, the First Home Loan, and the KiwiSaver first-home withdrawal. It is a goal of Kāinga Ora to support more New Zealanders into home ownership. More kiwi households living in their own warm, dry and secure homes is a positive outcome for New Zealand.

Jason Lovell

Home Ownership Products Manager