23 May 2024

First homes grant scrapped: 'It sets you back'

5:37 am on 23 May 2024
Jaie from Taupō and his partner

Jaie, a Taupō-based quarry manager, has been preparing to purchase his first home with his partner, but has just missed out on the grant. Photo: Supplied

A prospective first-home buyer says he is gutted the government has scrapped the First Homes Grants scheme, and fears he'll now miss out on the house he was looking at.

The government yesterday confirmed it was ending the initiative, with applications closing at 1pm - 30 minutes before the announcement was made.

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

Jaie, a Taupō-based quarry manager, had been preparing to purchase his first home with his partner.

He was planning to apply for a $5000 First Home Grant after he finished work at 3pm yesterday afternoon, but discovered that was no longer possible during his lunch break.

"I was on the internet... just getting all my paperwork in line and I popped onto the website just to double check I've got everything, as I was going to apply for it... after work.

"I read that from one o'clock... there is no more applications accepted," he told RNZ.

He described the loss of the grant as "quite gutting".

"It sets you back. It takes a long time to get here and you're right there get all excited and then you get a bit of a blow."

Jaie and his partner had been hoping to put in an offer on a Taupō property he said was "ideal" for their needs.

"We've got the deposit and everything... the grant would have helped us reach that deposit but yeah, it's caught us off guard a bit.

"We had no warning ourselves... I got onto my mortgage broker straightaway and told her and she's like 'what?' And then she looked it up and she's like, 'yes, you're right'."

There was now a "big chance" they could miss out on the house, he said.

Housing Minister Chris Bishop confirmed on Wednesday the grant would be scrapped. The government was retaining the First Home Loan scheme, which Bishop said evidence showed was a more effective way of supporting first home buyers.

He also announced 1500 new social housing places from July next year, to be provided through community housing providers.

Grant 'pushed me over the line'

A woman who RNZ is calling Sam used the grant to purchase a two-bedroom unit in 2020 and told RNZ she would not have been able to afford her home without the support.

"I really needed the grant. I had quite a low deposit and I was lucky enough to work with a really good mortgage broker who got me pre approval for a deposit just under 10 percent.

"Living in a small town in New Zealand I was able to scrape in and buy a two bedroom unit in early 2020. I was absolutely panicking at the time because it was just before we went into lockdown, but turns out it was perfect timing," she told RNZ.

Without the grant, Sam said, she would have been "no doubt... locked out of the market."

"That [the grant] was really what pushed me over the line with having that semi-decent deposit. It was just me and I was on a single income and I have no family help, so I really, really was reliant on that."

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