Aspiring KiwiBuild homeowners - time to get a mortgage pre-approval

Property

KiwiBuild pre-qualification stage to open in early August; proof of finance and income necessary to enter the ballot

27th Jul 18, 1:28pm by Jenée Tibshraeny

Aspiring KiwiBuild homeowners will from early August be able to start seeking Government approval to enter the ballot scheme.

The Ministry of Business, Innovation and Employment (MBIE) says those who would like to buy a KiwiBuild home will need to submit the following documentation when the online pre-qualification stage opens:

proof of finance (ie an approved mortgage application)
a signed Statutory Declaration that they will abide by the KiwiBuild rules
proof of income from the Inland Revenue
a copy of their passport or proof of citizenship/residency

MBIE says there’s no rush to complete the qualification phase.

“You will have plenty of time to get your documentation together to provide us with the information we need before the ballots open for KiwiBuild homes," it says.

“In the coming months we’ll let you know about KiwiBuild projects in the regions you specified, and keep you up-to-date on ballots you might like to enter.

“The first ballot will be in Auckland and we’ll be providing you with more information about that shortly.”

Those wanting to throw their hats in the ring for a KiwiBuild house will need to follow the following process:

To be eligible for a KiwiBuild home, you need to:

be a first-time buyer or a ‘second chancer’ – that’s someone who no longer owns a home and meets the asset test that applies to the KiwiSaver HomeStart grant
have a household income less than $120,000 for a single applicant, or no more than $180,000 for more than one purchaser
be a New Zealand permanent resident or citizen, or ordinarily resident
intend to live in the home for a minimum period of three years.

The aim of the KiwiBuild scheme is for 100,000 homes to be built over 10 years.

At least 50,000 of these homes will be in Auckland. MBIE’s initial focus in other parts of the country will be in areas with high housing demand and affordability pressures.

The price cap for one-bedroom homes in Auckland and Queenstown will be $500,000, two-bedroom homes $600,000 and three or more bedroom homes $650,000.

Across the rest of New Zealand, the price cap will be $500,000.

Within two weeks of MBIE opening registrations for expressions of interest in KiwiBuild on July 4, it had received 35,496 registrations. This is where they came from:

The Government’s goal is for 10,000 homes to be built by July 1, 2019.

See this page for more information on KiwiBuild.

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39 Comments

by Pragmatist | 15th Dec 19, 10:13pm 1576401199

by Houses Overpriced | 27th Jul 18, 1:56pm 1532656565

Who are you kidding

by Pragmatist | 15th Dec 19, 10:13pm 1576401220

by pacifica | 27th Jul 18, 10:37pm 1532687859

Most looking already have their pre approval, they don't have the properties to match it though. Like the SHA rollouts it can literally come down to a sadly well oversubscribed lottery or literal queues to be first in first served to put the name on a sale and purchase agreement, without even seeing homes. The question will be since what they were registering on was an update newsletter what the income ranges were for those applying to actually buy a subsidised home.

by Carlos67 | 30th Jul 18, 10:16am 1532902608

Well there in part is the problem with the next generations these days. Whats wrong with Hobsonville and Pakuranga as a first home ? You don't seriously think they are going to be building all these new homes on the North Shore, Parnell and Remuera do you ? $650K doesn't even get you the LAND to build it on. Too many people think this is a kind of state home lottery where the government gives you a huge legup at their expense. Beggers cannot be choosers, take it or save a couple of million for that house that "Meets your standards"

by Pragmatist | 15th Dec 19, 10:14pm 1576401243

by Averageman | 27th Jul 18, 2:38pm 1532659099

So pre approval of loan capacity, whether its KB or and other house, is a waste of time...?

by Pragmatist | 15th Dec 19, 10:14pm 1576401260

by toddinator | 27th Jul 18, 2:54pm 1532660066

It will be very interesting to see how many of the 35k who registered interest will actually move through to this next step. I'd expect quite a large drop off (but still many X more than the actual homes available).

by ex socialist | 27th Jul 18, 2:59pm 1532660366

I think that it is 1,000 by July 2019; and 6,000 by July 2020

by Nzdan | 27th Jul 18, 3:03pm 1532660621

Pre approval doesn’t mean jack, it doesn’t mean the bank will lend to you.

by Grendel | 27th Jul 18, 3:47pm 1532663266

What do you mean, Isn't that exactly what a pre approval is?

by Pragmatist | 15th Dec 19, 10:14pm 1576401286

by Nzdan | 27th Jul 18, 5:40pm 1532670034

A pre-approval is not the same as an offer of finance. You cannot use a pre-approval to negate a Subject to Finance clause on a sale and purchase agreement.

by Robt | 30th Jul 18, 11:47am 1532908025

You cannot use a pre-approval to negate a Subject to Finance clause...?? Say what? said clause is put in by purchaser who is free to have it there or not whether he/she has an offer of finance or not

by Laminar | 27th Jul 18, 6:53pm 1532674431

@Nzdan Thats not really the case. Technically you are correct but in practice pre-approval is near bullet proof subject to the conditions of the approval like the property been acceptable to the bank etc.

by Houses Overpriced | 27th Jul 18, 7:55pm 1532678109

"Subject to conditions"... there you go, you shoot your self in the foot

by Zachary Smith | 28th Jul 18, 6:48pm 1532760519

You are right Laminar. Obviously the borrower will need to get a final clearance on the property being purchased. The bank wont approve it if the property is not suitable but that is reasonable. Some banks are stricter than others but if the bank doesn't approve it will also be in the buyer's best interest not to purchase.

by THE MAN 2 | 27th Jul 18, 8:46pm 1532681181

So you are keen to buy a KiwiBuild home but don’t know where it is located?
Do we know how big this shoe box is?
You need to think carefully before you buy as if there are going to be as many as they say there are, your capital gain will be very small at best
KiwiBuild is going to be a flop for most people that believed in Twyfords BS as they just won’t meet Bank criteria and it is going to hinder your financial position for a long time
However it is up to everyone to make choices and it is not going to be any subsidised scheme if that is what you are hoping for

by custard | 27th Jul 18, 9:01pm 1532682117

“your capital gain will be very small at best”

There’s more to life than chasing capital gain – a place to call your home and a place that offers security and tenure for you and your family.

You should know this as well as anyone – being a Christchurch dweller.

by pacifica | 27th Jul 18, 10:55pm 1532688956

If the homes end up in Christchurch I am sure people will have the option to turn them down for literally anywhere else. I am curious as to your thoughts as to why stable secure housing is not important to families since you yourself have benefited from a system of ownership. You are often suggesting people should jump on the ladder, not realising it had been pulled up, & broken down for scrap generations ago. Consider the young families of Christchurch, at this point too many are more likely to commit suicide than see stable housing, especially with rising insurance difficulties. This is a dramatic contrast to the rest of the nation, now a known mental health phenomena. You are looking at the making of future generations who will be expected to carry & pay down the boomer retirements. Trust me when care workers themselves need care workers you are going to have difficulty to find good nursing & home care staff for your retirement, not to mention need more police.

by Pragmatist | 15th Dec 19, 10:15pm 1576401337

by Nic Johnson | 27th Jul 18, 11:54pm 1532692492

Pragmatist

I've tried to translate this for TM2 but this is all I got back to your question about who he is trying to communicate with...

'Other daleks, is the answer and we will run the world with one and two sylab 'oh shit that word is too long for me' words' ble

Some of you will get this, others will find it a strug'gle and I hope that T M 2 will be able to commu, ' oh shit we have gone above the two sylab 'oh shit we have done it again' words. How do I commun.. Bugger it speak, to people who have a longer switch board than 2 syla 'bugger'

'Nic Johnson can you help?'

Like a said Prag-ma-tist.. I've got to stop mate just in case this shit is cont-ag-ious?

by pacifica | 31st Jul 18, 5:26am 1532971575

Oh god a who fan. He should have gone with the name The Who because it is already leaning towards an Abbott and Costello skit. https://www.youtube.com/watch?v=kTcRRaXV-fg

by Rob | 28th Jul 18, 1:33am 1532698415

I wonder how many of these will have cash to buy, and won't need to get a loan.
I wonder though how much choice people will get, and can buyers do due diligence. eg Get building reports to make sure it is built properly and doesn't have dodgy flashings. The last thing people want to do is buy a potential future leaky building.
I would think anyone buying one would want to make sure that it isn't the type of place that could be a future ghetto. They are best to do what they did with state houses, and build them within existing neighbourhoods. Eden Park would make a good site for example. Although I wonder what the neighbors would prefer, a stadium, or a more concentrated housing development.

by Dale Smith | 28th Jul 18, 9:04am 1532725457

They just had to put the word 'affordable' in the title. If you keep telling a lie long enough.......

Would be good to hear from a bank.

They will be working out risk on the make up of kiwibuild scheme development itself, irrespective of what the borrower can bring to the table.

I suspect their main concern with the kiwibuild scheme itself, is will it cause prices to drop, either in individual developments, areas, or wider, by over supply, quality issues, or buyer/tenant mix.

by Houses Overpriced | 28th Jul 18, 9:16am 1532726206

Yeah, and what did the national government do to house prices.. what do you currently get for 650..

by Dale Smith | 28th Jul 18, 11:32am 1532734366

If you listen to John Keys pre election speech 2007, what he says about the sad state of housing affordability due to Labours failings is very similar to what Phil Twyford said pre election 2017 about the sad state of housing affordability due to Nationals failings.

The results show that what National didn't do failed. Just because Labour is doing something does not mean it will work.

I agree they have to do something, but disagree with their process.

by Houses Overpriced | 28th Jul 18, 11:41am 1532734906

Ah, that donkey that created this nation of debt

by Deadcatbounce | 30th Jul 18, 2:27am 1532874429

To answer your question you can buy 3-4 bed weatherboard house from 1960s in Papakura on 800 to 1000sqm subdividable land zoned as mixed housing suburban. That allows you to have two to three houses on one section or subdivide. You can buy 1 relocatable house, rent it out and let tenant pay 70% of your mortgage repayments for both properties. Subdivide and sell the sections for 300-400k per section or sell section plus used relocatable house for 600k each as package which will repay or dramatically reduce your mortgage and you will end up with house and section for free or with enough money for deposit to buy in good suburbs. The best option of ALL is to make a project for subdivision with three shitty shoe boxes and sell this project to kiwibuild for guaranteed price, banks will be happy to pay for your construction if it is underwritten by Jacinda and you can sell each of these crappy houses for $650k to her, with no stress from falling market as taxpayer will pay all possible losses and with only 120k deposit it is risk free investment which will make you killing. However these options are only visible to people with brains. What Kiwibuild house has to offer for 120k deposit from your pocket??? You will get one of those Shoe boxes in newly built ghetto on 300sqm land or less with 30 year of repayments and no forseeable shortcuts to repay earlier, lovely neighbours who cannot even afford to pay their rent without governmental help and with resale restrictions. What a value for your money lol!

by Pragmatist | 15th Dec 19, 10:16pm 1576401379

by Houses Overpriced | 30th Jul 18, 9:06am 1532898382

by you very elaborate and insightful reply, i take it that you have a couple of such projects underway, if according to you, its so profitable???

by Double-GZ | 28th Jul 18, 9:32am 1532727155

House prices should go back to 2002-2004 levels. KiwiBuild prices should reflect on that.

by bilbo | 30th Jul 18, 8:29am 1532896180

Build 100,000 shoe box homes across the country
Labour’s KiwiBuild programme will buy 100,000 fletchers quality, shoe box homes over 10 years, with 50% of them in Auckland. Standalone shoe boxes in Auckland will cost $500,000 to $600,000, with stacked shoe boxes and adjoined shoe boxes under $500,000. Outside Auckland, ginger bread houses will range from $300,000 to $500,000.

by RickStrauss | 30th Jul 18, 11:37am 1532907468

$200k build small house in Wanaka:

https://www.youtube.com/watch?v=jPBDPcqfCwA

Next to no heating cost. Interesting concept.

by Tui12 | 28th Jul 18, 6:41pm 1532760078

Double-GZ but never went to Grammar?

by Tui12 | 28th Jul 18, 6:41pm 1532760082

Double-GZ but never went to Grammar?

by Halfway To Paradise | 29th Jul 18, 6:28am 1532802522

Pre-approvals last 3months generally, good luck finding a KIwibuild home in that time-frame.

by Property Leader | 30th Jul 18, 8:43pm 1532940182

I am starting to be interested in this KB lottery the government is running.
How are they deciding where to build the houses. Nelson is the third least affordable city in New Zealand after Queenstown and Auckland. According to the information put out by the government some houses will be built there but so far non are flagged as being supplied. Little wonder Nelson applicants do not even show up on the applications. Perhaps Nelson is not politically suitable for the government handouts.