This week Parliament will select another members’ bill from the cookie tin (I kid you not, it really is a cookie tin) and I’ve just launched a new bill I’m hoping will get pulled – to help people get into homes faster. Unfortunately for people of my generation getting into a home of your own – fast or slow – is becoming impossible. A home of your own is still the Kiwi dream. For many today it’s just that – a dream – and I want to help make it a reality with my Faster into Homes members’ bill.
Countless couples and graduates are no doubt are sitting around their kitchen tables, going over their numbers wondering how they’ll ever get together a deposit. Prices are rising at unsustainable levels and getting a deposit together has become even harder with Loan to Value restrictions across the country. It’s not a coincidence that the average age of the first home buyer has increased to 32, or that there are twice as many multiple property owners as first home buyers in Auckland in 2016.
It’s especially hard to save a deposit when 12% of your income is taken out in compulsory student loan payments. Then there’s still tax, Kiwisaver and the rising costs of living to pay. My Faster into Homes Bill would allow students to defer paying back their student loan for a period, and instead pay that 12% of their income into a first home saving account. This would make a huge difference for young people who are struggling to get together a deposit; a bachelor’s graduate on a median wage could save $18,000 after five years. Add that to Kiwisaver, HomeStart grants and private savings and a deposit is looking possible. Of course, this won’t change the broader problem of housing affordability – to really tackle that, we’ll have to change the government!
Under this scheme, anyone who is earning over the repayment threshold of $19,000 could defer part or all of their mandatory 12% student loan repayment into a housing account. That money would be held by the IRD, who would approve it to be spent on a purchase or build of a first home. If you decided for whatever reason not to go ahead with a new home, that money would be transferred back to the student loan. Currently borrowers can receive a Student Loan repayment holiday when travelling overseas for one year and we think it’s only fair that those who stay, work and save in New Zealand can access a repayment break too.
341,500 Kiwis are currently making compulsory student loan payments and we want to give them a choice to prioritise paying off their loan or save for a home. Helping young people into homes will also encourage them to stay in New Zealand, which will help student loan repayment levels in the long run. We think this is an issue of fairness. Secure housing is important and we need to give young people a pathway into their own home.
Check out our handy online calculator to see how much extra you could save for a deposit.