A government scheme aimed at helping Kiwis get on the property ladder by buying their first home with them has been put on hold due to "unprecedented demand".
Kāinga Ora announced on its website last night that the scheme was oversubscribed and it would not be accepting any more applications.
“Due to recent unprecedented demand, this scheme is now fully subscribed and therefore will not be accepting any new applications while we work through our commitments to those already in the scheme,” the statement said.
Kāinga Ora general manager of national services Nick Maling said funding for the First Home Partner scheme is limited and the recent changes made to it had resulted in a 450% surge in monthly applications.
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Those changes came into effect in mid-August and allowed applicants to purchase existing homes in addition to new builds and increasing the household income from $130,000 to $150,000. The income cap criteria for intergenerational whānau was also pushed out to include larger whānau, allowing any eligible whānau of at least six people who normally live together to purchase a home through First Home Partner.
Kāinga Ora is now processing a huge number of applications that are at different stages and will be contacting current applicants to confirm the status of their applications, he said.
Maling encouraged would-be homeowners to look at Kāinga Ora's other home ownership products such as First Home Loans and First Home Grants that are still available.
The shared ownership scheme was announced in October 2021 and enables first-home buyers to purchase a majority share in a new home with Kāinga Ora owning the minority share and listed on the property title as the co-owner.
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It was aimed at Kiwis who have a low deposit or could not service a bigger loan. Applicants needed to have a deposit of at least 5% and have bank approval to be eligible. Kāinga Ora would then buy up to 25% of the home, or $200,000, whichever was lower.
Kāinga Ora said it had helped hundreds of would-be first-home buyers into the scheme since it was launched two years ago.
Easy Street Mortgages mortgage adviser Gareth Veale said it was sad for homeowners who had been working towards using the scheme who now suddenly didn't have it as an option.
He hoped Kāinga Ora would quickly weed out the pre-approved applications that were not going anywhere so others who were serious about getting on the property ladder could apply once some funds were freed up.
“I would love to know from Kāinga Ora who utilised this. It was really heavily promoted to new New Zealanders.”
Veale said he had personally only had about a handful of clients access First Home Partner and the First Home Loan scheme was far more popular.
“It’s a valid scheme and it is helping people into their homes and home ownership is really important so this is just one of the tools. It isn’t the only tool and it shouldn’t be the first tool.”
The announcement that First Home Partner is closed for applications comes just months after mortgage brokers warned another scheme also aimed at helping buyers into their first home could also become oversubscribed after loopholes in the scheme meant it was not necessarily targeting the people it was aimed at.
Mortgage brokers told OneRoof in August that the majority of home buyers accessing the government’s First Home Loan scheme are new arrivals to New Zealand.
The First Home Loan scheme allows beneficiaries to buy a house with just a 5% deposit, rather than the standard 20%.
However, Kāinga Ora dismissed claims that one residency group was benefitting at the expense of another and said the eligibility criteria and the application process is the same for everyone.
Te Tūāpapa Kura Kāinga, the Ministry of Housing and Urban Development, which is responsible for setting the policies for First Home Loan, was also happy with the uptake because the scheme was aimed at getting first home buyers in New Zealand on the property ladder and had never been limited to only New Zealand citizens.
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