Hundreds of first-time buyers who claim to have been unfairly impacted by the Government’s surprise decision to axe the first home grant scheme are now racing against the clock.
The scheme, which gave low-deposit buyers up to $10,000 towards the cost of their new home, was pulled late last month as part of an overhaul of the Government’s housing arm, Kāinga Ora.
However, buyers who were midway through the process of buying a house using the grant before the cut-off date of May 22 have been thrown a lifeline by the Government.
They now have until 11.59pm on Friday, June 14, to submit their application for a first home grant closure exemption, but have to meet the following criteria: Firstly, their pre-approval for the first home grant expired before May 22. And secondly, they signed a sale and purchase agreement on or before May 22.
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The week-long “narrow” exemption was announced by Housing Minister Chris Bishop on Friday, June 7, and followed strong criticism of the decision to end the scheme by first-home buyers and housing groups. As of Monday night, 224 people had applied for the exemption.
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Bishop said in a statement on Friday that he had been contacted by individuals “placed in a tricky situation because of the sudden closure of the grant”.
“For example, some people have valid Sale and Purchase agreements for first homes but have had settlement on those properties pushed out for a variety of reasons. The Government agrees those people should not be worse off as a result of the closure of the scheme.”
Mortgage Managers financial adviser James Puah was not aware of any clients applying for the exemption, but said clients were now rushing to buy before their approvals expired.
“People are trying to get it done before they lose their opportunity to use the grant,” he said.
A lot of clients relied on the grant for their deposit. Not having the extra $5000-$10,000 would delay their homeownership plans by about six months.
One client, Puah said, was trying to find out from Kāinga Ora if he would still be eligible for the cash if he signed a sales and purchase agreement now and his purchase didn’t go unconditional until after his approval expired in July.
Two more clients had missed out on the couple allowance as the husband had applied for his approval to be renewed before the Government’s announcement, but his wife had not. This left them with only half the amount they had been banking on.
Housing Minister Chris Bishop has acknowledged that some buyers had been "placed in a tricky situation". Photo / Getty Images
Barfoot & Thompson salesperson Ying Li Howe said first-home buyers were in a rush to use their first home grant approvals before they expired.
She said even though the grant approval lasted six months, buyers had much less time to use it because banks only gave a pre-approval for up to three months.
The grant had been a “fantastic bonus” for a lot of her buyers, she said. “I think it will impact the market in the short-term, but soon people will get used to it and move on.”
Nick Maling, Kāinga Ora's general manager of national services, encouraged first-home buyers eligible for the exemption to act quickly.
In addition to meeting the criteria for the exemption, applicants had to meet all other first home grant requirements such as income and house price caps.
SM Property director Scott Muirson always urged buyers to work with their solicitor and mortgage broker and to submit their paperwork for grants or schemes as early as possible.
“You never know when they will shut down the fund like the First Home Partner scheme. They might run out of cash earlier than anticipated.”
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