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Rural Lifestyle - Q & A

Is there any Government financial assistance for first home buyers?

The New Zealand Government provides three different avenues for assistance when buying your first home.

KiwiSaver First Home Deposit Subsidy
If you've been contributing to KiwiSaver for at least 3 years, you may be eligible for a first home deposit subsidy. The subsidy is worth $1,000 for each full year you've been contributing to KiwiSaver, up to a maximum of $5,000 for five years. If you and your partner are both eligible, you can receive a subsidy of up to $10,000.

To qualify, you must have contributed at least the minimum amounts below:
  • 4% of your total income for the period 1 July 2007 to 31 March 2009 to a KiwiSaver scheme, or a complying superannuation scheme, for at least three years
  • 2% of your total income for the period 1 April 2009 to 31 March 2013 to a KiwiSaver scheme, or a complying superannuation scheme, for at least three years
  • 3% of your total income for the period 1 April 2013 onwards to a KiwiSaver scheme, or a complying superannuation scheme, for at least three years
You must also be buying your first home and be planning to live in the house yourself for at least six months. Guidelines will also apply based on your income and the price of the house you are purchasing. See the KiwiSaver website for more details.
Housing New Zealand First/Home Grant
This initiative provides grants (10% of the purchase price, up to $20,000) to purchasers of select properties that Housing New Zealand is selling.

To qualify you must:
  • Be purchasing your first home
  • Plan to live in the house for at least three years
  • Have a gross annual income before tax of $53,000 or less (for an individual) or a combined gross annual income before tax of $80,600 or less (for a couple)
  • Be pre-approved by a certified bank or lending institution (i.e. to show you can service the mortgage)
See the Housing New Zealand website for more details.
Housing New Zealand Welcome Home Loan
If you have a combined household income before tax for the last year of $80,000 or less (for an individual) or up to $120,000 combined (for two or more borrowers) you may be eligible for a Welcome Home Loan through select lenders. This means that you will only be required to provide a deposit of 10% (rather than the typical 20%) with Housing New Zealand underwriting the loan for the lender.

There are limits to the size of the loan depending on the region you are buying. See the Housing New Zealand website for more details. 

When should I make an offer on a property?

Housing markets can move quickly and a property that is listed could be sold within weeks, days, or even hours.  You should put an offer on a property as soon as you wish to buy it, whether it's for sale by auction, private treaty or tender.

When should I involve a solicitor or conveyancer in my home purchase?

You should consult a qualified lawyer, solicitor or conveyancer before a Sale and Purchase Agreement (or any other contract) is signed.  Your opportunities to end the contract can be severely limited if you seek legal advice after signing.

Can I negotiate the settlement period or deposit?

Yes, you can.  The move in date, financial settlement period, and the deposit amount given to the agent can all be negotiated with the seller prior to signing the contract.

Should I lease out my holiday home on a short-term or long-term lease?

Some of the usual rules governing tenancies don't apply for short fixed-term tenancies of less than 90 days duration.  You don't need to worry about the rules concerning fair market rent, tenant eviction notice periods, or rent increases following substantial improvements to the property.

Rental returns for short term tenancies will normally be higher than for long term leases, especially if the property is fully furnished. But as holiday seasons represent only part of the calendar year, this higher short-term rental yield must be balanced against the security of income that a long term lease situation provides.

You should consider the tax treatment of your holiday home by the Inland Revenue Department (IRD). While all rental income is taxable and needs to be declared on your tax return, your ability to deduct expenses related to the holiday home (such as interest, insurance, depreciation and Council rates) may depend on how often and for how long, the property is rented out.

In general, you will be allowed a deduction if you can demonstrate that these expenses are related to the earning of rental income. The amount of time that the property is rented out may impact on this assessment. If you only rent the house out for 10 weeks per year, you may only be able to claim the deduction at a rate of 10/52 - i.e. pro-rata, based on the weeks that rental income was generated. 

If the IRD believes that your expenses are private in nature, and are not a legitimate expense that led to the generation of rental income, they will likely be denied. Visit the IRD website for more information, or contact a First National Real Estate agent.

What is a Body Corporate? How does it work?

Whenever land is sub-divided and registered as a unit title development (i.e. apartments or units) then a legal entity known as a Body Corporate is created. The Body Corporate members are all of the individual owners of a unit or flat within the development or apartment block. Most Body Corporates establish a committee, who perform administration and tasks and represent the interests of all of the owners.
  • The Body Corporate is responsible for the management and maintenance of the units or flats, ensuring they are kept to a good and tidy standard
  • The Body Corporate will have (or produce) a set of rules that every owner will need to follow. These rules cover things like the use of shared access ways and how repairs or maintenance costs will be attributed to each owner.
  • The Body Corporate will typically charge an annual levy to cover basic ongoing expenses (e.g. rubbish collection, utilities for common areas, insurance etc.).  They may also levy one-off payments for extraordinary expenses (major repairs or renovations, or changes to rent if the premises are leasehold). 

How do I find a good tenant? Can I do this myself?

Selecting a suitable tenant for your commercial property is very important.  The best tenants will look after your investment and reliably pay rent throughout the terms of the commercial real estate lease. Long term tenants are preferable if you wish to receive regular uninterrupted rental income to service your commercial loan.

You should undertake a credit check on any prospective tenants. In New Zealand, you may only do this with the prospective tenant’s permission. Credit checks can be performed by several credit agencies directly online, or you can arrange these checks via your local real estate agent or property manager. Fees typically apply.

It's advisable to ask prospective tenants for references and to contact each reference given (or have your property manager do this), to check that the tenant is reliable and likely to keep up to date with rent payments.

First National agents maintain lists of prospective tenants waiting for particular types of commercial properties so we can help to speed up the leasing process for you.

How do I work out which housing areas will suit my price range?

Visit our First National Real Estate website, enter your budget and accommodation type sort (unit, flat, house etc.) and we’ll let you know where we have properties that are perfect for you. We have a wide range of residential properties available and coverage in all major New Zealand areas.

Should I buy now?

Housing markets change all the time, like interest rates.  Whilst house prices often increase in popular areas over time, this is not the case in all markets or areas.  First National Real Estate has many offices in New Zealand.  Our experienced real estate agents are happy to discuss your specific needs and circumstances with you, and provide guidance whether you are buying or selling a home.

Will First National help me work out how to purchase a home?

First National Real Estate agents are trained to help guide first time home buyers through all the steps involved with purchasing a property. We aim to make the process as simple and hassle-free as possible for you.  Importantly, we're here to help. Call us or drop in for a chat and we'll give you advice to get you into your dream home.
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