KiwiBuild buyers who sell or rent properties face 30pc bill


Twyford said he expected few KiwiBuild owners to sell, but some might strike unforeseen circumstances.

ABIGAIL DOUGHERTY/STUFF

Twyford said he expected few KiwiBuild owners to sell, but some might strike unforeseen circumstances.

Buyers of KiwiBuild homes who go on to sell them within three years will have to pay 30 per cent of their capital gain to the government.

When Labour first announced its KiwiBuild proposal, it said buyers who sold within five years would have to give any money they made out of the deal to the government.

That has now been amended.

Housing and Urban Development Minister Phil Twyford said buyers who bought KiwiBuild homes would sign a contract prohibiting them from selling at all for three years.

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“The KiwiBuild Unit has the ability to caveat their property to enforce this rule – and will do so. A caveat stops the house from being able to sold.”

But he said, in situations where the buyer secretly sold their house, or needed permission to do so, they would be liable to pay damages equal to 30 per cent of any capital gain.

If they rented the whole house out at any time in the first three years, without prior consent from KiwiBuild, they would pay the government 30 per cent of any gross rent received.

Abigail Dougherty/Stuff

The first 18 families were welcomed into their new KiwiBuild homes in Papakura, Auckland.

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Twyford said he expected few KiwiBuild owners to sell, but some might strike unforeseen circumstances.

“We have done this to make sure KiwiBuild is fair and available for those who need it – first-home buyers who want to own their own home. This will stop anyone looking to quickly flick off KiwiBuild homes for capital gain.

“We understand that life is unpredictable and sadly people die, they get sick and their relationships break up. There needs to be some flexibility. For this reason KiwiBuild has the ability to consider circumstances on a case-by-case basis and work compassionately with families. This strikes the right balance against a community that rightly expects KiwiBuild homes will go to those who need them and the fact that life is complicated and unpredictable.”

KiwiBuild homes must be sold under a price cap, leading to some criticism that selected buyers are getting an unfairly cheaper house than they would if they bought on the open market.

McLennan, where the first KiwiBuild homes were sold, currently has two-bedroom terraced homes listed for sale from $619,000 – compared to the $579,000 paid for three-bedroom KiwiBuild homes there.

But Twyford said in most cases there was no subsidy.

Kiwibuild tracker

Labour promised 100,000 new homes in 10 years. Its first deadline is 1000 built by July 1, 2019.

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Homes under construction

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“The reason the Government chose the 30 per cent mark is because, as KiwiBuild homes are not subsidised, they are sold for the market price for that type of home. Any increases in house values can be attributed to general market trends. Requiring the whole capital gain would be unfair and would mean they would struggle to buy a new home. That is why we have struck this balance.

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“The decision to use these enforcement measures was made in August, two-and-a-half months ago, as we were working through the eligibility criteria. Anyone that has pre-qualified for KiwiBuild will be well aware of these provisions as they are part of the process.”

Economist and commentator Shamubeel Eaqub said he could not see a problem with the change.

“Everyone is looking to find reasons to criticise the thing. I’m not sure what KiwiBuild does beyond offering to sell you homes off the plan via a lottery.

“Let’s say they bought a home and sold it, what are they going to do with that money? They’re going to go and buy something else. “



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