Fri. Jun 21st, 2024
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Government Scraps First Home Grants, Sparking Outrage Among Aspiring Homeowners

The dream of owning a first home just slipped further out of reach for many New Zealanders as the Government announced the immediate scrapping of the First Home Grant.

Housing Minister Chris Bishop made the announcement on Wednesday, following  revelation of the plan the day before. Bishop acknowledged the decision’s unpopularity, stating, “I appreciate that this will cause some pain for some people.”

This abrupt policy change hits hard for individuals like Bal Bhatia, who has been diligently saving for a home. “It’s a bit of a gut punch,” Bhatia said. “I think it’s pretty brutal. It came very suddenly, especially when we’re trying to future-plan.” Bhatia now faces the daunting prospect of being unable to afford a deposit.

The First Home Grant, which offered $5000 per buyer for an existing home or $10,000 for a new build, has been a critical support for many. A couple could receive up to $20,000 towards their deposit. However, no new applications will be accepted, though already approved grants will be honored.

“We’ve had to make the tough, but I think the right decision, to discontinue the First Home Grant to reprioritise that money to social housing places,” Bishop said. He explained that the grants were ineffective because $5000 only constituted about 4 percent of a 20 percent deposit for an affordable home.

Critics argue that the decision demonstrates a lack of understanding of the struggles faced by potential homeowners. “He is out of touch. He thinks that oh well it’s only 4 percent so it doesn’t matter,” Labour housing spokesperson Kieran McAnulty said. “I don’t think he gets how important this is for a lot of people, how hard it is to buy.”

The funds from the discontinued grants will be redirected to create 1500 social housing places. McAnulty criticized this move, saying it supports fewer homes than Labour’s initiatives and leaves both social housing and first-home buyers disadvantaged while benefiting landlords.

Prime Minister Christopher Luxon defended the decision, stating, “I appreciate not everyone’s going to like it but we’re making a choice.” This marks a notable shift from National’s previous stance, which included advocating for increased price caps to expand access to the First Home Grant.

The policy shift comes at a time when the Government is finding significant funds for other initiatives, such as reversing interest deductibility changes, which many view as a tax cut for landlords. This has not gone unnoticed by struggling first-home buyers, who now find themselves facing a housing market even further out of reach.

In summary, while the Government hopes that forthcoming tax cuts will ease the burden, the reality for many first-home buyers is that the immediate removal of the First Home Grant feels like a severe setback. As they grapple with high rents and a challenging cost-of-living environment, this policy change adds to their financial strain, contradicting the Government’s promises to support the middle class.

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