Hamilton, August 14, 2023
As house prices have increased, many individuals and families who would have once bought a home have been priced out of home ownership. Progressive home ownership is one way to help them into their own homes.
The $400 million Progressive Home Ownership (PHO) Fund, launched in October 2021, is part of the Government’s wider Progressive Home Ownership Fund, which offers approved PHO providers funding via an interest-free loan.
The PHO providers then use that money to fund homes that are then used to partner with individuals and families in a rent-to-buy, shared equity or leasehold arrangement. It enables eligible individuals and families to co-purchase a home together with Kāinga Ora, to help overcome the deposit barrier.
A few changes announced a few weeks ago to the existing offerings under the scheme, are expected to take effect from today, August 14, 2023.
The key changes include
As part of the changes, all eligible applicants can now also purchase existing homes, in addition to new builds, through the scheme. This is intended to provide buyers with a greater choice of homes.
The second positive change is the household income cap, which has now been increased from $130,000 to $150,000. The third change is the income cap criteria for an intergenerational family has broadened to include larger families, allowing any eligible family of at least six people who normally live together to purchase a home through ‘First Home Partner.’
First Home Partner is one of many home ownership products and programmes available through Kāinga Ora.
How progressive home ownership works
Progressive home ownership (PHO) can help people into their own homes through several arrangements, depending on the requirements of the household. The buyers can select from options like rent-to-buy, shared ownership or leasehold schemes.
An eligible household initially rents their home from an approved PHO provider. Within a period of up to 20 years, the household puts aside savings and buys the home from the provider.
An eligible household becomes a part-owner in a home, along with an approved PHO provider. Within a period of up to 20 years, the household buys out the PHO provider and becomes the sole owner of the property.
The eligible household buys a registered leasehold interest in a home from a PHO provider with the right to occupy the property over the long term, such as 100 years. The freehold interest in the property is retained by the provider and the leaseholder pays a modest ground rent, as well as servicing any mortgage commitment.
Freehold home ownership is not achieved using a leasehold model, but the leaseholder has secure tenure in their own home and the opportunity to build savings over the term of the lease.
How to buy a home through the Progressive Home Ownership Fund
There are two ways for individuals and families to buy a home through the PHO Fund: through First Home Partner, a shared-ownership scheme run by Kāinga Ora – Homes and Communities or through a programme managed by an approved PHO provider.
First Home Partner with Kāinga Ora
First Home Partner is a shared ownership scheme for first home buyers who can service a standard mortgage but don’t have a big enough deposit or don’t qualify for a big enough home loan to buy a place on their own.
With First Home Partner, Kāinga Ora takes an equity share in a house, which the household buys out over time. Unlike other PHO schemes, where providers will match applicants to homes, with First Home Partner, applicants must find a suitable home themselves.
Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.