21 May 2024

Government expected to scrap first-home grants in favour of funding social housing

9:59 pm on 21 May 2024
Chris Bishop

Housing Minister Chris Bishop. Photo: RNZ / Samuel Rillstone

RNZ understands government support of first home grants will be scrapped in favour of putting more money toward social housing.

The scheme pays out grants of $5000 for an existing home, or $10,000 for a new-build, to first-home buyers whose income is less than $95,000, or $150,000 as a household.

The contributions to new home owners are worth about $60 million a year - but the coalition is reviewing all housing support initiatives.

Housing Minister Chris Bishop says the coalition intends to review all of its housing products and funds, and on Tuesday morning could not commit to maintaining the existing level of support for first-home buyers.

"We now spend billions upon billions a year on housing support, and so we're having a good look at all of those programmes," he said early on Tuesday.

The government could be much more targeted and efficient with its support, and could not commit to maintaining the existing level of support for first-home buyers, Bishop said.

"I can give them a guarantee that we are looking at all of the range of housing products that the government provides. We are taking a good, hard look at all of them. And once we've made a decision on them, I will make announcements about that."

By the afternoon his Cabinet colleague, New Zealand First's Shane Jones, had let slip the grants were on the chopping block, saying it was a matter being dealt with on Budget Day.

"All matters in the Budget will be dealt with on Budget night," Jones replied.

When asked whether that meant the grants would be abolished in the Budget, Jones paused, and then asked reporters to ask the first question again.

"Is the government scrapping first-home grants?" he was asked.

"No comment," he responded.

When National was in opposition in 2021 it criticised the Labour government for not paying out enough grants.

Like a social contract - Labour

Labour MP Kieren McAnulty

Kieran McAnulty Photo: RNZ / Angus Dreaver

Labour's housing spokesperson Kieran McAnulty said scrapping the grants would be a cynical move.

"It will mean that there are people that would have been able to buy a home, and now they can't. There's sort of a social contract with people when you announce a plan to assist them to do something so crucial and so significant in their life like buy a home, that you don't fiddle with it."

McAnulty said the scheme, which was originally started by the previous National government, was a good idea, and Labour had expanded on it.

"It's extraordinary it took the loose lips of one minister to reveal what is going to be pretty catastrophic for so many first-home buyers that would have assumed the government would continue this scheme."

He said removing the grants, while also restoring interest deductibility for landlords, would make things even harder for renters to get on the ladder.

Get the RNZ app

for ad-free news and current affairs