First-time and low income home buyers able to defer payments on land for 10 years under new Government scheme

First-time and low income home buyers able to defer payments on land for 10 years under new Government scheme

The government will make land available for a new home-buying scheme for 30 first-time and low income buyers, which will see them able to buy or build property, but defer payments on land.

Housing Minister Phil Heatley said buyers would be able to defer final payment on land for up to 10 years under the new Gateway Housing Assistance scheme.

The government has so far made 30 parcels of Crown or Housing New Zealand land available for the scheme, he said.

One parcel would be for one house.

Seventeen of these parcels are on the massive housing development in Prime Minister John Key's electorate in Hobsonville on the former airbase there. The Hobsonville site was designed by the previous Labour Government.

The Hobsonville packages were the only ones to already have houses on them, Heatley said.

The other 13 land packages were spread between Hamilton, Hastings, Gisbourne, Porirua, Palmeston North, Ashburton and Dunedin.

All 30 were currently zoned as residential land.

The parcels were firstly being offered to community housing organisations, such as Habitat For Humanity, who would then find people to buy them, Heatley said.

After the ten years, the organisations would have to pay the government out for the land.

The government would asses how successful the scheme was before making more land available.

A question and answer sheet (see below) sent out by Heatley's office said there would be two types of interest paid on the land purchases.

The first is a 3% annual fixed interest rate which is capitalised. The annual interest will only apply on the principal amount of the loan.

The second is interest that will kick in after five years of the scheme. This will need to be paid regularly, similar to a home loan. In the sixth and seventh years, interest will be charged at 1%; the eighth and ninth years at 3%; and the tenth year at 5%.

After ten years purchasers will need to start making repayments on the principal amount, which could be added to their home loan.

"Generally, it is expected that clients will talk to their lender and ask to refinance the Gateway cost into their home loan."

(Update 2 includes more Heatley comments)

The full release from Heatley is below.

Housing Minister Phil Heatley has today launched a new programme which will make it easier for first-time buyers and those on lower incomes to build or purchase their own homes.
Gateway Housing Assistance allows purchasers to build or buy a property but defer payment on the land.
“It is important the Government provides opportunities for people to move into home ownership. Affordable homes schemes such as Gateway is another way we can assist more people into a home of their own,” says Mr Heatley.
“Under Gateway full and final payment for the land can be deferred for up to ten years. This ten year period allows people on lower incomes to concentrate on designing and building, or buying, their homes before they assume the additional burden of paying for the land,” says Mr Heatley.
Community housing organisations are being actively targeted for the scheme as they will be able to develop the land and use the favourable capital and interest repayment terms to build even more affordable housing.
So far 30 suitable parcels of Crown or Housing New Zealand land have been identified and made available for the scheme.
Mr Heatley launched Gateway today in Porirua, where Habitat for Humanity has undertaken to develop two sections in Beauzami Crescent into three, to create affordable housing opportunities.
“Gateway will be yet another tool in the affordable housing tool-box. The Government already supports housing affordability through a number of other measures including Kiwisaver First Home Deposit Subsidy and the First Home Withdrawal, Welcome Home Loans, the Housing Innovation Fund and the Tenant Home Ownership Programme.
“We have also cut unnecessary bureaucracy and red tape to streamline building processes, which reduces the cost of building for everyone,” says Mr Heatley.

Here is the Q & A form from Heatley's office on the Gateway scheme 

Q and A’s Gateway

What is the purpose of Gateway?

To improve access to affordable housing for first-time and low-moderate income home buyers.

How does Gateway work?

Land identified by Housing New Zealand or the Crown as being suitable for the scheme made available for purchase by Community Housing Organisations or first-time or low-income purchasers.

The current market value of the land is established by an independent valuer.

The purchaser contracts to buy the land through Gateway and then arranges to build a home.

The purchaser will need to arrange a loan to cover the cost of the house they wish to build or move into. Purchasers will need to make regular repayments towards the home loan, but won’t have to make payments towards the land for five years.

There are two types of interest on the purchase. 

  • Fixed rate interest, set at 3 percent per year
  • Interest that applies after five years of Gateway

Purchasers pay three-percent-per-year and have it capitalised, which means that purchasers don’t need to pay it back to Housing New Zealand on a regular basis like their home loan. The 3 percent is calculated annually and added to the original Gateway balance.

The second type of interest is designed to progress purchasers to full home ownership without the need for Gateway. Therefore, no interest is payable in the first five years, but in years six and seven interest is charged at one percent of the original Gateway amount, at three percent for years eight and nine, and finally five percent for year ten.

Payment on the Gateway land is deferred for up to ten years. This payment break enables purchasers to get on with designing and constructing their home and gives them a chance to settle into mortgage payments before taking on the additional costs associated with paying for the land.

After 10 years, purchasers need to start making full payments for the Gateway land the house is located on. Generally, it is expected that clients will talk to their lender and ask to refinance the Gateway cost into their home loan.

How many sites are available?

At this time in addition to the three sites identified in Porirua, a further 30 sites will be made available around the country.  17 of these will be at the new Hobsonville site. The Hobsonville sites are two bedroom house and land packages.

Who can apply for a Gateway site and loan?

Community housing organisations who provide low cost home ownership options are being encouraged to apply. 

Individuals, couples or households, who are either first-time or low-moderate income purchasers with incomes of, less than $100,000 for one or two people, or less than $140,000 for three or more people can also apply provided:

  • They are NZ citizens or permanent residents with indefinite returning visa
  • They are 18 years of age or over
  • They are purchasing their first home or are previous home owners who are in the same financial position as a first time buyer
  • They are able to secure a home loan to build or buy a house on the Gateway land
  • They must agree to live in the house for the duration of the Gateway assistance (10 years)
  • They have at least 10% of the house construction/purchase costs as a deposit
  • They would not normally be able to afford the cost of the land and property together at the same time
  • They have realisable assets totalling less than 20 percent of the average house price

How do people apply?

Housing New Zealand officials are talking to community housing organisations in areas where land is currently available to offer them the opportunity to take up Gateway.

Once that process is complete, any remaining land will be offered to individuals via Housing New Zealand’s website:, or individuals can register to find out via email:

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


I will be talking to Heatley later this afternoon about the new scheme.

Please include any questions you would like asked in the comment thread.

I will be asking:

Where are the land parcels, what are they currently zoned as, how much land is in the parcels, how many houses are currently on the land, how many houses could potentially be built, will the plots all be the same size, will there be interest charged on the deferred payments, eligibility criteria.



Q: why bother?

do they want some land in kaeo?

One simple question: What if the price of the land falls over 10 years? Of course, Heatley will probably scoff at the suggestion, but how does a 10-year grace period on a govt-identified piece of a dirt guarantee that the buyer will better off in anyway? It has the potential to create a state-sponsored ghetto.

Please ask Heatley:

  • Is this scheme aimed at making property affordable or at protecting the building sector prices for new homes by porking demand.
  • How will the land be valued for rates payments
  • Will that rating be the value of the land to be paid for by the house owner
  • What happens if the owner cannot afford the land
  • Is there a chance this taxpayer funded scheme will just serve to pork building demand and prevent a drop in building costs for those people who do not qualify for this progressive socialist market adventure by the govt.
  • Why is the govt determined to waste taxpayer funds to prop up the property bubble at a time when it is on the decline.
  • To date, what has been the total cost/liability undertaken by the Cabinet in the private housing sector.
  • What unintended consequences of your decision do you hope never happen.

Some really good questions for hottie there Wally.....I don't think porking will survive edit.

I would like the answer to question six ...Alex.....water it from an accusation ...but get it asked and answered satisfactorily  if you can......... it'll be like a field trip without the sandwiches. 

Yes, great questions. I particularly like the last one. Also, I think it would be prudent to ask what the benchmarks of success are and how they will be measured.

My munny is on this brainwave idea having emerged from a wgtn beaurocrat when the pointy head asked what could be done to create more work for beaurocrats....what a sad but telling comment on a govt clearly out to protect a sick system that perpetuates a seriously unaffordable property market.....when the silly buggers should be letting the bloody bubble ponzi scheme collapse to the point where low income families can afford to buy a bloody home.

That would at least result in people being able to save and invest to create real jobs...instead of this BS idea emerging as a job creation goody goody idea for a quicky fake bit of building activity.

The sad but most likely outcome of this new benefit scam will be building prices remaining high due to the govt pork.

Does Heatley not understand that?

10 years ! - how does that government scheme works in the current worldwide crises, when none really knows what happening in the next 6 months ?

 ...or is it possible I do not have enough information about it ?

Sunny fine warm day down Kaikoura Walter?...or are we having a wee bum freeze from a southerly?

A good dose of rain here, covering the beautiful Kaikoura Ranges (2’880m) with more snow, so we can charge all the Aussies coming here a little bit more. Kaikoura was already dry (no decent rain for a month) on some places, before this rain - clearing now.

Freezing in Kaikoura...we know....howling southerly blasts with sleet and the Pacific anything but pacific....must be a fush and chup day Walter...!

Wolly - the sea is roaring, spectacular, fantastic to see and listen to. The cloud formations are interesting to watch and tomorrow with a good North Westerly, Kaikoura has the warmest temperature in the country -- again.

How is Blenheim by the way, are the seats along the Taylor River still underwater ? How about the sea ?

Not in Blenheim Walter....why are you not out with paintbrush and canvas capturing the mood?

..zh zh Wolly I thought the Taylor River flowing through the town centre is part of Blenheim – hmm!  I’m  not a “NZsceneryartist” I told you that yesterday - my old chap. Long way to the sea to see the sea in Blenheim – isn’t ?

Just taken from Stuff

to create affordable housing opportunities for Individuals, couples or householders who are first time buyers or on less than $100,000 for two people or $140,000 for three or more.

Less then 100,000 for individuals or two people  , based on that criteria wouldnt that qualify most NZers

My question for the Minister.  By creating a scheme aimed at "poor" people that encourages them to buy something that cannot afford today and relies on them being able to refinance in future, is he intentionally trying to re-create subprime, or is it just a coincidence?

It's a game of pork the market by Phil, Phil!

Use taxpayer dosh to pump a little building and lending activity while Bolly does his bit with the cheaper for longer game. The opposite to allowing the market to drop the price of land and the cost of building, so people could afford to buy and build without taxpayer assistance. But you see the real goal is to protect the banks by securing the bubble. That way the banks get to milk the economy into the distant future and the govt gets to stay in office on the back of fake activity all gooee with debt.

The same bloody rort played by Clark and Cullen. So this announcement amounts to a govt failure. 

Why does the land have to be 'sold'?

Why can it not be leased?

Was this considered - or can someone explain why such an idea is unacceptable.

The land will outlive the house (maybe)

Still can't get a learned opinion...

Is this a way of selling taxpayer 'assets'  (used to be called 'privatisation')?

This feels like a fire sale, not a policy related to housing affordabilty.

Why can't the land be leasehold?  No  land sale required.





Can you graze dairy cows on it....I'll take 100 sections


A Crafar

No you can't!!!'ll try and carry so many cows there wont be enough area to dispose of the effluent you'll flush it  down the nearist drain...

No, no, no.  So long as the farm is smack in the middle of urban utopia he can do like the Chinese - sell it to the locals for their gardens.  With all the greenies living in the city they will welcome the sh.t with open wheel barrows.

And if the house is sold within the 10 years? ( I assume the'yre not going to imprison people in their new houses!), do the owners get to 'add' the value of the land to the sale ~ to repay the land component to the Government ( an interest free loan, in other words?) or do they sell it with the 'free land' part in tact ,for the duration, and just reclaim the house part ( still an interest free loan on the implied land value) and in that case, who gets to do the valuing?

And what happens if they sneakily  rent it out during the first 10 years .  Renting at market rates will bring in a pretty good return if the outgoing repayments are only on the house portion .  So Sell up at the end of 10yrs after collecting rent and any capital gain its money for jam .. 

I have the same question as Phil - if they can't afford it now, they sure as hell won't be able to in 10 years.

About time some media person with guts, asked the question: beyond peak oil, how are folk expected to repay debt at existing 'givens'.

Tell him energy underwrites wealth - and while you're at it, tell him it underwrites the food-chain, as it applies to his Aquaculture 'free lunch'.

Then ask what the wealth prospects are for those suckers 10 years hence......

Bet you don't ask, though, eh Alex?

Stick to the old fiscal, eh?  Help them perpetuate the smoke-and-mirrors.

David Carter told a farming group that he believes that peak oil will result in agriculture being forced to modify the way it operates.  It is the first time I have heard any govt Minister acknowledge that oil resources maybe finite and we will need to change our ways.

That's interesting.

Modify is an interesting term, for a process which goes from 4WD tractors to the Amish in half a generation!

He mentioned something about technology - I think he believes that wil be our saviour.  I know where I can get a horse drawn buggy and a few horse drawn farm implements.They can stay under the trees for a bit longer though, I think.

I guess now that all the finance companies have gone bust someone had to fill the void...why not the government..should be plenty of ex Finance company CEO's that can advise.

Yet again more bureaucratic meddling in the marketplace ...... Taxpayer subsidised ( of course ) , to fix a possible problem ( high house prices ) , which the government ( Labour 1999-2008 ) exacerbated .

Wally is correct : What unforeseen consequences will spew forth from this latest governmental brain wave .

Here is another reason to repudiate Bernard's new central planning theorem ..... the central planners may well be complete  idiots .

Not one of my questions was asked....not friggin one!....ferk me.

Is it not clear to all that this policy announcement amounts to the govt putting its hands up and saying "we give up"...and...."what would Helen do?"

The property bubble is the death of this economy. The govt is protecting that bubble while spinning the BS that it is concerned about property being affordable...note that Heatley never uses the words "seriously unaffordable"...he stays well clear of that bomb.

Porking the building market does not improve the affordability for the thousands who do not want to live in a state ghetto as prisoners for 10 years. Instead of contractors dropping labour charges and material suppliers cutting back on the profits by reducing prices...we end up with a false signal to raise the bloody cost of building.

What does Heatley not understand about that?

The ones who have not or cannot save enuff to buy are being sucked into the property market on the spin that the govt is out to help them into homes....this is so similar to the bullshit that prevailed in the US....and where did that end up? This is a taxpayer supported warping of an already thoroughly buggered property market.

I can't really add to what Wolly has already said. I am guessing that this is NOT what Hugh Pavletich has been lobbying for for the last 5 years.

Yes, this idea is fraught with problems. If the problem of the high COST of ALL land, due to artificial regulatory induced scarcity, is not addressed, the same consequences will continue to apply. Land being 10 times as expensive as it should be, is purely and simply a massive obstacle to the development or redevelopment of it, to the most efficient use, or to any use at all. If an enemy power or some Quisling traitor had designed a scheme to wreck economies, it would hardly be better than this.

All that this new "Heatley solution" will do is provide an arbitrary and inconvenient POSSIBLE "solution" for a subset of the population, when the real issues are systemic and structural. People for whom it is not convenient to live in the special locations, will not be helped.

And what is the guarantee that the "buyers" will be able to afford the sudden kicking in of the land cost 10 years down the track? Why is this different to the inventive mortgage schemes that caused so much grief in California? Will there be a wave of defaults at the 10 year point? SOLVING the problem would involve making the land 20% or less of the total package value - not (the status quo)50% or more, merely deferred for 10 years.

I suspect that the government has a beady eye on the BUBBLE value of the land it is looking to "sell" here.

Having seen the TV1 item on this....I am sickened by the govt decision to slice some pork and buy the votes to win a by election.....what a bloody stupid move by the Cabinet. Just when they should be pushing like hell to drive the property prices bring back sanity to the give Kiwi families some real hope of a home of their own without a crippling debt to a bloody bank...they do this.......

My belief that this bunch in the Beehive have no intention of seeing an end to the country being a property ponzi game, is now stronger than ever. The aussie banks have them under their complete control. Noddyland is now guaranteed to remain a low income zone where the bulk of the citizens will be tenants for life to an aussie bank.

I think you said it, Wolly.

Further to what I said above, nothing here is going to unwind our property bubble in an orderly fashion. A messy crash has to be somewhere in NZ's future, even if further idiot's rallies occur now.

Think: how much capital, and returns to labour, might investment be used for INSTEAD of being sunk into completely non-productive bubble values of land? The fact that a plot of land sold for $100,000 in 2000 and $1,000,000 now does not mean it is ten times as productive. It means that $900,000 worth of investment has been leeched out of the productive part of the economy.

THINK: "tradables sector. 2000-2009 - SHRUNK 12%......"               I wooooonder why?

The world changed forever. Considering aspects of the world crises the government should change plans urgently. Buying houses and having mortgages for average Kiwis isn’t affordable. The best case scenario is renting an apartment.

For the private sector good opportunities arise investing over apartment buildings to  simplistic treehouses and luxury tent manufacturing.

How many people have noticed the Sunday Star Times quoting some expert as saying that renting instead of buying would put you ahead, on average, $50,000 to $100,000 IN A MERE FIVE YEARS.

THIS is bubble evidence if anything is.  It is like the P/E ratio in the share market being completely nuts, out of touch with reality.

And the laughable reason given, for buying versus renting, is that most people,don't have the strength of character to save that money, and it will be 'wasted'. So buy proprety, and get the compulsory savings built in!

But isn't that just the point? People need the money ,not needlessly spent on buying property ,to spend. Isn't that what's going to get the economy going? How does tying up purchasing power in property interest payments better the economy? When buy = rent, buy; It makes no financial sense in a deleveraging world, otherwise

It also makes no mention of the thousands you will pay to banks in interest in a world where capital gain will not come easy for decades

I guess it is but a small step now for govt to waste taxpayer munny on selling property ownership as better than renting. That is what this latest rort amounts to. The game is all about ensuring a never ending demand for borrowing. Without that, the fat profits of the 'banking system' would go away. People might understand they would be better off saving up to buy property because the prices would collapse. Once that sort of thinking enters the heads of the peasant fools, well that would bring an end to the whole game of milking the peasants for fat profits and paying off the political swine with 'benefits'. 

This is why the govt is using taxpayer munny to prop up the property bubble.(That is what this latest scam is all about) They don't want the word to spread that tis better to save and avoid borrowing at all costs....a frugal peasant base is not what they want at all. Let that sort of thought enter the minds of the masses and where would you get the big fat salaries from. The game of bullshitting the peasants into believing they too can have it's the most impoprtant game in town....right JK?

So instead of letting the market for land prices be determined by the potential for people to save the price of the land on their piss poor sell the idea of ownership NOW, pay it off later. Hey presto you have a market of idiots chasing dreams of wealth all wrapped up in pure spin and BS. And if by chance you can cause a bubble, that's bloody great because it reinforces the greed aspect. Top it off with a steady bloating of the population with immigration and who gives a rat's arse if it all end up in a sorry heap....plenty of time for the political and banking elite to milk the system and store away the real wealth. 


Someone, I can't remember, said it well:

Buying with a mortgage now, is at best, renting with debt.