SECURE HOME PROGRAMME
Secure Home is an assisted ownership programme. The objective of Secure Home is not only to provide decent and affordable housing, but long-term housing stability and security in the same way that home ownership does.
HOW DOES IT WORK?
Secure Home is based on a leasehold agreement between the Housing Trust and the household. Essentially, the Trust retains full ownership of the property and the household purchases the right to occupy that property at the cost of house construction (excluding land). The household then pays an annual ground rent to the Trust for use of the land, which is set well below market value and only ever increases annually with inflation for the period the household remains in the programme. This ensures the initial purchase price (Upfront Payment) and ongoing ground rent remain affordable for the household in perpetuity.
The Secure Home agreement provides a 100-year lease, which provides the household with a home for their lifetime. Secure Home is not a rental arrangement. A household in the Secure Home programme has all the benefits and responsibilities any home owner has, except the ability to on-sell the property in the private market, and make capital gains/losses as the traditional free market allows.
The lease cannot be transferred or on-sold on the open market, but should a household decide to move on, the Trust will purchase the house back at the original purchase price, plus an annual inflation adjustment (provided the house has been well maintained). If the household has made any improvements to the property which the Trust has approved, then these too will be factored into the resale price.
WHAT DOES IT COST?
A qualifying household would need to raise a minimum 5% deposit (based on the house value only, not the land) if they qualify for the First Home Loan, or 20% if not. This can include KiwiSaver and the HomeStart grant. They must be able to obtain a home loan with a bank for the remaining amount (based on the house cost only, not the land). The household then pays an annual ground rent to the Trust. It might look something like this:
Upfront Payment: $420,000
Minimum 20% deposit required: $84,000 ($21,000 if you qualify for the First Home Loan)
Home loan required: $336,000 ($475 a week, based on 5.5% p.a. over 25 years)
Ground Rent (1.5% p.a.): $6,000 ($115 per week, based on a land value of $400k)
Rates, maintenance & insurance: $170 per week (approximately)
In the above scenario, it would cost a household $590 per week to be in their own home. Compared to an average weekly rent of $750 for a typical 3 bedroom home in Queenstown – this makes Secure Home a no-brainer!
To be eligible to apply for Secure Home you must first meet the following basic criteria:
- The property must be used exclusively as the household’s primary residence and must not be vacated by the household for any more than four weeks over a 12 month period.
- The applicant's combined household income must not exceed a certain level, which is determined by the size of the household.
- At least one person from the household entering into the Secure Home Agreement must be a New Zealand resident or citizen.
- At least one person from the household entering into the Secure Home Agreement must be in full time employment in the Queenstown Lakes District (fulltime is deemed as a minimum of 30 hours per week).
Once the above eligibility criteria has been determined, you must then show that you can meet the specific financial requirements of the Secure Home programme, as outlined in the earlier example (which includes bank approval for a home loan).
View our template Secure Home Agreement and Secure Home Financial Declaration and Acknowledgement here. Please note that these are templates only and may be subject to change.
RAISING A DEPOSIT THROUGH KIWISAVER
Have you thought about using KiwiSaver for your deposit? KiwiSaver is a voluntary retirement savings fund which is contributed to by you, your employer and the government. But asides from saving for your retirement, you might also be able to use the money to help with buying your first home. There are two key benefits of KiwiSaver that assist with home ownership.
1. KiwiSaver First Home Withdrawal
After a minimum of three years membership of a KiwiSaver scheme, you may be able to use the funds to put towards your deposit. Find out more about KiwiSaver First-Home Withdrawal here.
2. KiwiSaver First Home Grant
You can apply for this grant if you have belonged to and regularly contributed to a KiwiSaver scheme, complying fund or exempt employer scheme for at least three years.
The First Home Grant provides eligible first-home buyers a grant of up to $5,000 per individual to put towards the purchase of an existing/older home, or a grant of up to $10,000 per individual to put towards the purchase of a brand new home. Find out more about the HomeStart Grant here.
If you are new to KiwiSaver or you are already in the scheme and wish to find out more about the benefits, please visit the KiwiSaver website here.