Labour plans equity scheme for first-home buyers

Steve Maharey

Labour would introduce an equity share scheme to help first home buyers if re-elected for a third term, Housing Minister Steve Maharey said today.

Under the scheme, the Government would provide a portion of the purchase price to help low and middle income earners who found it difficult to save for a deposit and who might not have sufficient income to service a full commercial mortgage.

Mr Maharey said Housing New Zealand would take a stake in the property, meaning a first home would become more affordable for low income families.

The purchasers would have to repay Housing New Zealand's share if they sold or moved out of the property.

Mr Maharey said equity share programmes worked best where there was high growth in property prices and strong demand for housing, such as in Auckland.

A similar scheme in the United Kingdom had proved successful in helping families into their own home, he said.

The size of Housing New Zealand's equity stake had yet to be decided but would be at a level that helped people buy a starter home.

The equity contribution would allow purchasers to take out a smaller loan, reducing their household mortgage servicing costs.

Housing New Zealand would gain or lose value depending on market fluctuations.

Consideration would be given to allowing the purchaser to make small payments against Housing New Zealand's equity so reducing its stake over time.

Mr Maharey also said Labour would increase the number of low-interest loans and grants available through the Housing Innovation Fund. This fund encouraged third sector group and local government to increase ownership of rental properties for low-income earners and those with special needs.

- NZPA