Adviser says the government's home loan grants have "unrealistic" requirements
A new petition has been launched urging government to change its criteria for the First Home Grant and First Home Loan, with one brokerage owner saying that it currently excludes most first home buyers with “unrealistic” requirements and price caps.
In order to access a grant, first home buyers must be purchasing a property valued at a maximum of $500,000 for a new build or $400,000 for an existing property in Northland - however, the median price for the region sits at $665,000.
For Auckland, the price cap is $700,000, while the median house price sits a $1.12 million. Sarah Curtis, owner of the Northland-based Sarah Curtis Mortgages, said that in almost five years of being a mortgage adviser, she has never managed to secure a grant for a client under the current requirements.
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“It’s been such a long time since those price caps were reviewed, and we were really hoping that the recent announcement from the government would give us something that we could actually use to help our clients, but it didn’t,” Curtis said.
“We’ve been trying to talk to different MPs over the past four years now about some of the areas where first home buyers could be helped.”
“Many clients qualify against every other requirement, but it is just the house purchase price that negates their opportunity to access this much-needed grant,” she explained.
“These are people who have scrimped and saved to get a 5% deposit, are able to meet mortgage repayments and have found their dream home but, because of the final house purchase price, are shut out of the grant they are relying on to buy.”
With housing supply being so low, Curtis said that the restrictions on the grant for first home buyers are “incredibly tough” - particularly for new builds, where, in order to access the grant, buyers must present a fully drafted building contract in a very short timeframe.
“On the day that you want to go unconditional on the land that you buy, you need to be able to supply Kāinga Ora with a fully signed build contract,” Curtis said.
“In Northland, we wouldn’t be able to get any builder to quote that quickly, let alone prepare a fully signed build contract. In the four and a half years that I’ve been doing this, we’ve never had a first home buyer be able to get that grant to be able to do a build.”
Curtis said that quality of housing is also an issue, as the few properties within the price cap tend to have various issues which make banks reluctant to lend against them.
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“Even though there are a small number of homes that are within that price cap, the banks won’t look at high-level lending for them because they’re just not great houses,” she said.
“If the government can remove the price caps, that would be a great first step. We also need to really support first home buyers with that build process - we’ve got a lot of people who could be building a home with the help of that grant, but having such a ridiculous requirement just means that no-one can access it.”
“Our petition raises key issues with the current First Home Grant and Loan criteria that the Government needs to address,” she concluded.
“Although we know this isn’t a silver bullet to fix New Zealand’s housing issues, giving more prospective first home buyers access to Government funding will go a long way towards a stronger, healthier housing market where more New Zealanders can afford their own home.”
