Rent to Own - FAQs
How do we qualify?
To qualify for the Rent to Own (HomeSaver) Programme you need to be:
- A first time home buyer
- Have minimal debt
- Have the ability to save towards a deposit
- Have a regular total household gross income (before tax) of between $65,000 - $95,000 per year
- In 5 years' time, be capable of obtaining a mortgage to purchase at least 55% of the value of your home.
What if I am on a low pay?
Your total household gross income (before tax) must be between $65,000 - $95,000 per year to apply.
What if I have had credit problems in the past?
This may not be a problem. We will review your circumstances and you will get expert financial advice to help clear your debts.
Is there anything else I need to do?
A home ownership education programme may be a requirement. If this is the case, it will need to be completed before or shortly after taking occupancy of the property.
What independent advice should I take?
You may wish to talk to a solicitor, financial advisor or a family friend. Feel free to ask them to talk to us.
5 YEAR OCCUPATION
How does the 5 Year Occupation Agreement work?
The Occupation Agreement provides the same rights as a Residential Tenancy Agreement with the option of purchasing the home after 5 years.
A bond is required to be paid at the commencement date of the Occupation Agreement. This will be equal to 3 weeks' rent and will be lodged with Tenancy Services. The bond is refunded at the end of the agreement or when you buy the property, provided that all weekly payments have been made and the property has been well looked after.
The Occupation Agreement gives you an absolute right to occupy the home for up to 5 years provided that rent payments are up-to-date and the property has been well maintained.
Can I sub-let the house to someone else?
No - In line with the Residential Tenancy Agreement and Residential Tenancy Act, you cannot sub-let the property to anyone else or make structural changes without the prior approval of the property owner, which in this case, is The Housing Foundation.
However, once you own the home outright from The Housing Foundation you can do as you wish.
How is the cost of the weekly payments assessed?
Your weekly payments will be determined by your ability to afford the rent based on your total household gross income (before tax), which will never be any greater than market rent.
Who maintains our home while we rent?
Housing Foundation will pay land rates, insurance and structural maintenance. You will pay electricity, telephone and internet, water, contents insurance and will be responsible for the day-to-day upkeep of the property i.e. mowing the lawns etc. We expect and want you to look after the property as if it were your own.
How big are the houses and are they new?
The properties will generally be new or near new, two, three, four or occasionally, five bedroom homes.
Can I make changes to the house being built?
No - The design and plans for the houses are determined by the builder. You are not able to amend the design or plans.
THE PURCHASE PROCESS
When can I buy the house?
You choose when to buy - you have the right to purchase part or all of the property at the end of the 5 year period or anytime within it, but only if your circumstances change and you are able to do so. You can put down your roots, raise your children, plant a garden and become part of the local community. Then when you are in a position to raise the money, you can purchase the property.
What if I still don't have the money for a deposit when I am ready to buy?
You will be required to join, or be part of the Kiwisaver programme, as well as save towards your deposit.
We will also help with the deposit by giving you 25% equity in the increased value of the property.
What is Equity?
The Equity is the difference between the original cost of the property and the current market value of the property. For example, if a property is priced at $650,000 when you move into your home and the value of that property increases over 5 years to $850,000, then the equity is the difference, which in this case, is $200,000.
If the figures from the above example are used in our Affordable Rental Programme, you will receive 25% of the increased equity. The equity that we gift you is $50,000 and this will go toward your deposit.
Will I receive my equity for my deposit in cash?
No - Your equity is deducted from the purchase price of the house as if it were a deposit.
Who values the property?
An independent registered valuer will assess the current market value of the property and a copy of the valuation will be provided to you. On commencement of the occupancy the original price of the property will always be less than the valuation, thus some equity is available to you from the day you take occupancy, allowing for growth in the future.
What if the value of our home goes down after 5 years?
You will have the option of continuing to rent until market values rise again. You will not lose any money because you have paid only the equivalent or less than market rent in the meantime.
Can the Housing Foundation provide mortgage finance?
Will the Housing Foundation help us to find a mortgage?
Yes - We will assist you with introductions to banks that we work with, but to eventually buy the property outright you will need to arrange your own mortgage from a bank or other financial institution.
What if we can't afford the mortgage payments after 5 years?
This should not happen as the amount of mortgage you can borrow is determined by how much you can afford to pay as mortgage payments.
Who maintains our home when we become an owner/shared home owner?
All maintenance from this point on will be your responsibility.
What if I sell our home after we have purchased it?
That is entirely your choice; there is the requirement to first offer the property back to the Housing Foundation to purchase it at the market price. This gives Housing Foundation the chance to purchase the property from you and then offer it to another working household who may be trapped in the rental market. Please note that you will not be eligible for our affordable housing programmes in the future.
IMPORTANT TO NOTE:
If you move out before the 5 years is up, you will terminate your Occupancy Agreement and you will have terminated your rights to purchase the home. You will have paid rent for the home while you have been the occupant. If you terminate your tenancy, you do not get a share of the growth in market value of the property.
How do I apply for the Rent to Own Programme?
Check out our Step by Step Guide for our basic criteria. Then follow the link to our Registration Form.
Also, click to check out our Shared Ownership programme.
Shared Ownership - FAQs
What if I earn more/less than the income requirements?
The Housing Foundation generally requires households to be earning a total gross income (before tax) of between $65,000 - $95,000 per year. This is so you are able to adequately service a bank mortgage that enables you to afford to purchase a significant share in your home. Household gross income is generally capped at $95,000.
What if I have debt?
If your total household debt is less than $10,000 you may qualify. If your total household debt is greater than $10,000 it will significantly reduce the mortgage amount you can borrow, which will reduce the size of the share you can purchase. Plus, the banks may not want to lend to you if they think your debt is too high. However, the Housing Foundation does operate another affordable housing programme - Rent to Own (HomeSaver) - which might be better suited to you if you have debt of more than $10,000.
What is the minimum deposit required?
You must be able to provide a deposit of at least $10,000 to be considered for our Shared Ownership programme. This can come from your Kiwisaver account if their terms and conditions are met.
Where are the houses?
Please click on Housing Developments to see our current housing developments.
How is the market value of the properties determined?
It is determined by an independent registered valuer, who sets the value based on recent sales in the area.
What role does Housing Foundation play as shared owner?
The Housing Foundation plays a passive role. The Housing Foundation does not charge the household any interest or rent on its share of the property. When the property is sold, both the household and Housing Foundation get their share of any increase in the value of the property.
For example, the below figures show a household ownership share of 70%:
|Property purchase price (example only)||$650,000|
|Household's ownership amount (70%)||$455,000|
|New Zealand Housing Foundation's ownership amount (30%)||$195,000|
How often can I increase my share in the house?
You may purchase more shares-a minimum of 5% each time-in your home any time after the first anniversary of your purchase date. Once you own 85% of your home, you must buy New Zealand Housing Foundation's remaining 15% in one transaction.
Is there a time frame for me to achieve full ownership of the house?
The Housing Foundation expects you to fully own your home after 15 years. If you do not own it outright by then, the Housing Foundation will charge you interest on the share of the house that you do not own.
How do I apply for the Shared Ownership Programme?
Check out our Step by Step Guide for our basic criteria. Then follow the link to our Online Registration Form.
Also, click to check out our Rent to Own programme.
Step by Step Guide
Thank you for your interest in our Housing Developments and what we do.
Here is a Step-by-Step Guide that takes you through the steps that you need to take on the pathway to home ownership. Please take the time to read through the Guide so you have the best chance of joining one of our Housing Programmes.STEP ONE:
Check out our Current Developments to see if there are homes being built in a location you are connected to already, either through living or working in the same area.
Read about our Housing Programmes and find out if what we offer is a suitable match to your particular situation.
Check your eligibility.
Our basic preliminary criteria are:
- All applicants must be a New Zealand citizen or New Zealand permanent resident, and
- At least one member of the household is in full time employment (35+ hours per week), and
- Your total household gross income (before tax) falls between $65,000 - $95,000 per year (Please note that the minimum amount may vary depending on each housing development, house type, house price and area of the development), and
- Your total household debt is minimal, and
- You can provide a minimum deposit of $10,000 (which may include Kiwisaver); this is required for all Shared Ownership programmes. If you don't yet have a deposit, you may be suited to the Rent to Own Programme. Read more here, and
- You are not a current homeowner in New Zealand or overseas, i.e. you are a first time home buyer, and
- You are committed to owning your own home.
Please note: even if you meet all our basic preliminary criteria, we may not have a house to offer you at this time. Currently we are receiving many more registrations of interest than we have homes available.
Complete your Registration Form.
If you think you meet our basic criteria, please complete and submit a Registration of Interest Form. This provides us with enough of you and your family's basic information which enables us to assess your eligibility into one of our programmes. Please be accurate and honest with the information you provide so you have the best possible chance of being invited to take the next step towards home ownership.
After submitting the Registration of Interest Form, a Housing Foundation team member will be in touch with you to let you know if you have met the preliminary requirements. Depending on your particular circumstances, you may be invited to make a more formal Application for a home.
If you are not invited to submit a formal Application (See STEP FIVE), Housing Foundation will offer you advice on how to increase your chances in the future which will take you a step closer to home ownership.
If you have met our preliminary criteria, a Housing Foundation team member will send you a formal Application Form to complete. This is a more comprehensive form that requires supporting documents. Please ensure that you complete all sections fully.
You may also be asked to prepare a budget with a registered budget advisor (we can give you the details of budget advisors closest to you) so that we can see your financial plan for the future.
Our team will complete a thorough assessment of your application and a Housing Foundation team member will be in touch with you. This assessment can take up to three weeks as we receive a large number of applications, so please be patient. If you are successful with your application, you will progress to the next step in the process. Our team will make sure you know what to do all the way through to the exciting part of the process when hopefully a home will be allocated to you and your family.
Important Information about Your Obligations if you are offered a home in one of our programmes.
Every year you will be contacted by a Housing Foundation Household Support Manager to arrange a visit for an Annual Review. This is so we can have a chat about how you are enjoying your home and if you are on track with your financial goals.
It is your responsibility (if you are in our Shared Ownership programme) to pay the Annual Management Fee every year; this is non-negotiable, however, we are happy to customise a payment plan to help you pay this annual fee.
After an initial defect period has ended, as a shared home owner (in our Shared Ownership programme) it is your responsibility to complete any maintenance that is needed on your property. Your home is likely to be be your biggest asset and regular maintenance is very important to protect it. You will find some useful tips in your Resident Handbook that you will receive when you move in and here.