26 October 2021
Kāinga Ora – Shared Ownership Scheme
What is the Shared Ownership Scheme?
The Kāinga Ora Shared Ownership Scheme enables eligible buyers to purchase their first home with the assistance of Kāinga Ora (who will be a third party to the purchase). Through this Scheme, Kāinga Ora will own a share of the property that homeowners will buy out over time. The purpose of this Scheme is to give families a chance to own their own home.
If you are eligible, you will be required to enter into a Shared Ownership Agreement. Effectively, Kāinga Ora owns a share of the property with you (as tenants in common) in proportion to their contribution to the purchase price.
An example of the Shared Ownership Scheme is where a buyer has saved 15% of the purchase price, a participating lender has agreed to lend 75% of the purchase price. Kāinga Ora will then contribute the remaining 10% of the purchase price and be given a 10% share of ownership in the home. This contribution is separate from the bank loan and is not the same as a home loan.
Am I eligible?
To be eligible, you must meet the following criteria:
be over 18 years old;
have a total household income before tax of no more than $130,000.00;
have a good credit rating (you will be subject to a credit report);
be a first home buyer;
have not previously received shared ownership support from Kāinga Ora;
be buying the home as your primary place of residence for at least 3 years after the settlement date; and
be a New Zealand citizen, permanent resident, or a resident visa holder who is “ordinarily resident in New Zealand”; OR be applying with someone who meets the citizenship or residency requirements, and are married, in a civil union or de facto partnership with that person.
What are my financial obligations?
To be eligible financially, you must meet the participating banks requirements to receive a home loan. This is usually a minimum of 5% of the purchase price of the home and can include:
KiwiSaver first-home withdrawal – at least $1,000 must remain in their KiwiSaver account.
First-home grant – up to $10,000.00.
Gifts from family members – this requires a gift declaration.
How much will Kāinga Ora contribute?
If you are eligible, what Kāinga Ora will contribute is calculated on a case-by-case basis. The maximum that Kāinga Ora will contribute is 25% or up to $200,000.00.
Do I have to buy back Kāinga Ora’s share?
Yes, you do. You have two timeframes to work towards when purchasing back Kāinga Ora share of the property. The first, is to use your best efforts to purchase the full Kāinga Ora share within 15 years from the settlement date. If you are unable to buy back Kāinga Ora's share within 15 years, you may be required to pay an annual service fee (currently $2,250.00 (plus GST) ) which is subject to variation to cover reasonable costs. The second timeframe is that you must have purchased Kāinga Ora's full share no later than 25 years from the settlement date. If you are unable to do so, Kāinga Ora may sell your home or sell your share of the property on your behalf.
How do I buy back Kāinga Ora’s share?
You can begin the process of buying back Kāinga Ora’s Share by submitting a share purchase request online either through your First Home Partner account or, through your Kāinga Ora Relationship Manager. You have the option to purchase the share in a one lump sum or, in increments of no less than $1,000.00. This money can come from either your savings or via a bank loan. The repayment figure will be based on the current market value of your home.
What is my maintenance, repair and improvement obligations?
The shared ownership agreement that you will sign has a provision which sets out that you agree to “always keep the Property in good condition” and “repair or replace any broken or damaged part(s) of the Property as soon as reasonably possible.” Kāinga Ora also has the right to inspect your home if there is reasonable concern that you are not complying with your maintenance and repair obligations.
If you intend on making improvements to the property, approval from Kāinga Ora must be obtained before you undertake any building work to the property. This includes, but is not limited to adding to, removing from, or altering your home. This is also a provision set out in the shared ownership agreement that you will sign.
Any queries or questions that you may have can be directed to the Kāinga Ora team on 0508 935 266 (9am – 4pm, Monday to Friday) or email email@example.com.
The above information is of a general nature only. The information in this article does in no way constitute legal advice and all readers should contact a law firm for advice relating to your specific circumstances.