Changes to First Home Buyer Schemes to allow for purchasing of existing homes and extend household income caps

Written by Lois McLintock

Updated: 3 August 2023 

The government’s Progressive Home Ownership Scheme (PHO) is set to reach more potential first home buyers with changes being announced to the scheme earlier this week. These changes will take effect from 14 August 2023 and are good news if you are a first home buyer.

The PHO was established in 2020 and is administered via two pathways. The First is Te Au Taketake,  the pathway for Māori and Iwi to access the scheme. Te Au Takatake works with PHO providers who develop homes and work with whānau through leasehold, rent-to-buy and share equity schemes. The second is First Home Partner which is delivered through Kāinga Ora and is a shared equity scheme targeted at households who can afford to service a mortgage, but may not have a large enough deposit to qualify for a home loan to suit their whanau’s needs. Households can find a suitable home and buy out Kāinga Ora’s equity share over time if their deposit and home loan don’t quite get them over the line to enter the housing market. The aim of the PHO is to get at least 1,500 people contracted by June 2024. As at 30 June 2023, the PHO has 861 households contracted.

The government has sought to address some of the barriers individuals and families are facing when purchasing their own home through the PHO scheme, focusing in particular on families with children, Māori and Pacific peoples, and those who have specific accessibility needs.

There are five key changes that the government has announced:

  1. Buyers will now be allowed to purchase existing homes. This is a significant change. Previously, the scheme only allowed to buyers to purchase new builds. This change will diversify the location, cost, and variety of homes that eligible candidates will be able to buy, making the scheme more accessible.
  2. The income cap to be eligible for the scheme will increase from $130,000 to $150,000. This reflects recent wage growth while still keeping the focus on those who need some assistance.
  3. The income cap will be flexible in the Te Au Taketake pathway (the pathway for Iwi and Māori organisations to access the PHO). Māori and Iwi will be eligible for the scheme if up to 50% of their household of six or more people earn over than the standard income cap.
  4. There will be increased flexibility of the timing of funding applications. This will allow PHO providers to proceed at a faster pace to make the best use of time and funding available.
  5. The recyclability of funding will be extended under the PHO from 15 to 20 years for rent-to-buy and shared equity schemes with Kāinga Ora. This is aimed at reducing the cost to participants.

These changes should benefit everyone, however, they are aimed at populations struggling to access home ownership, such as Māori, Pacific peoples, families with children, people who have physical accessibility needs, lower income households, and people living in regions with low levels of housing development.

It is hoped that these changes will deliver a significant increase in uptake of the PHO programme, whilst maintaining the objectives of the programme and ensuring more Kiwis are getting into their own homes.

The Ministry of Housing and Urban Development is monitoring delivery progress and will report back to the Housing Minister by the end of 2023 should any further updates be required.

If you would like some guidance in assessing whether you may be able to access the PHO and how it can work for you, get in touch with our Solicitor, Lois, who will be happy to assist you by providing practical advice and guidance.