The Government now allows KiwiBuild homes to be sold to existing homeowners who needed to downsize or relocate due to COVID-19.
A May Cabinet paper shows the Government considered expanding the definition of eligible KiwiBuild purchasers from the current limit of first-home buyers and 'second chancers', or those who once owned a home but don't anymore.
The document was included in a swathe of information dumped by the Government on Friday related to its COVID-19 response. The document shows a range of proposals put forward to Cabinet to help the housing market.
Some of the proposals under housing were accepted, such as the decision to allow up to a quarter of unsold KiwiBuild homes into the open market, which was announced by Housing Minister Megan Woods in August.
Adjusting the eligibility criteria to purchase a KiwiBuild home was also included in the changes Dr Woods announced – one that seems to have gone unnoticed because it wasn’t highlighted in the original press release about changes to KiwiBuild in August.
A Cabinet paper included in the document dump shows the proposal was accepted by Cabinet.
Existing homeowners are able to purchase a KiwiBuild home if they meet the relevant income and residency requirements.
For a single person, you cannot earn more than $120,000 a year, and for couples they must have a combined income of less than $180,000.
To be eligible for KiwiBuild you must also be a New Zealand citizen, permanent resident or resident visa holder, and you have to be 18 or older.
The purchasers would also have had to show evidence that the KiwiBuild home they were moving into would be their only home, because that is the criteria for owning a KiwiBuild home - you must not currently own a home.
KiwiBuild purchasers also need to commit to living in it for at least one year for a studio or one-bedroom home, and at least three years for a home with two bedrooms or larger.
Labour's KiwiBuild programme was established in 2017 with a total funding envelope of $2 billion, of which $950 million remained at the time of the Cabinet paper.
Dr Woods said in August that $250 million from KiwiBuild would be repurposed into a new $350 million fund to support the residential construction sector hit by COVID-19, and it was sold as a complementary programme to KiwiBuild.
The Government shares some of the increased risk associated with COVID-19 by backing developments through underwrites - either purchasing unsold houses from developers or topping up any shortfall, depending on the contract.
Similar underwriting happens on KiwiBuild developments.
KiwiBuild has so far delivered 602 homes and there are 927 under construction.
Labour promised 100,000 houses in 10 years under KiwiBuild, but with just 258 houses built as of September 2019, the policy was 'reset' - the targets were dropped and it shifted towards progressive home ownership.
The Government promised to deliver an extra 8000 new public and transitional homes through Budget 2020 to help boost the construction sector, in addition to the 6400 public housing homes that were currently being built.
The documents note that for each of the past four years building consents for over 30,000 dwellings were issued across New Zealand, and have been at record levels.
Consents for 37,700 new dwellings were issued in the year to January 2020, with a combined value of almost $14 billion. But the data used was a mix of projects in the planning stage with those actually under construction.
Those projects at the pre-construction stage, even where building consents are issued, are likely more susceptible to delay or cancellation as a result of a demand shock in the economy due to COVID-19.
Therefore, the document notes, even a supply impact half that of the Global Financial Crisis could reduce new housing by around 7000 houses per year.
"This would worsen the housing and related social outcomes that New Zealand is already experiencing, even as the general economy begins to recover."
Correction: An earlier version of this article said the policy had not been accepted. A spokesperson later told Newshub the policy was accepted by Cabinet, but there was no specific mention of it in the original press release.
