The move is to pave the way for social housing
The Ministry of Housing and Urban Development recently announced that it is scrapping the First Home Grants program to give way to social housing, saying that the government may be able to recover $245m in revenues in the next four years. The government also announced that it would be releasing $140m of fresh funding to finance 1,500 new social housing projects with its partners, commencing in July 2025.
Housing Minister Chris Bishop (pictured above) said that Kāinga Ora will no longer accept new applications but clarified that the housing agency will still process existing and pre-approved applications.
"If you've gone through the system and you've been approved for a first home grant or you've been pre-approved or you've currently got approval, and you're going out there and looking for your first home – that can last up to six months, all of that will be honoured,” said Bishop in a recent media briefing.
While the First Home Grants was scrapped, Bishop confirmed that the First Home Loan would remain, saying the latter had been seen as the more effective way of helping first home buyers to finance their new home.
Based on government data, Kāinga Ora provided first-home buyers with an income of less than $95,000 with a $10,000 grant for new-build houses, or $5,000 for an existing home, which they can use for renovation. The same goes for a household earning less than $150,000 in income.
The housing minister identified Emerge Aotearoa, CORT, and the Salvation Army as partners, which could be contracted to give first-house buyers social housing places. Bishop also said these social housing places would be managed through a process run by the Ministry of Housing and Urban Development.
Bishop said that the move was to fill the hole for social housing places left by the previous government, and even called it a “fiscal cliff” since the program had been proven as expensive for the government.
On the other hand, Labour leader Chris Hipkins (pictured) said that the government’s move to scrap the program “shattered” many New Zealanders’ dreams of owning a home.
"Whilst giving $2.9bn of tax cuts to landlords, they're cutting one of the schemes a lot of New Zealanders rely on to get that deposit together to buy their first home,” Hipkins said.
Instead of scrapping the First Home Grants, Hipkins said that the government should scale up the program. He also said that it is the landlords who will benefit from the new scheme the most.
“They're tilting the playing field in favour of wealthy landlords who can afford to buy multiple properties and get tax breaks, and be rewarded with tax breaks for that, whilst a generation of New Zealanders won't be able to buy their own home,” he said.
