Shared equity and leasehold could be pathway for 152,000 – report

Up to 152,000 lower- and middle-income Kiwi households could be eligible for affordable shared equity and leasehold pathways to help them into their own home, new research shows. 

The newly-released Westpac NZ Shared Home Ownership Report found home ownership had fallen from 75% in the early 1990s to less than 60% today and is on track to fall below 50% by 2048.

The report, authored by Deloitte, estimated that 152,000 lower-and-middle-income Kiwi households who are currently renting could be eligible for affordable shared equity and leasehold home ownership pathways.

Affordable shared equity and leasehold arrangements involve a third party – usually a community housing provider (CHP) – contributing equity or land towards a customer’s first home purchase, reducing the size of deposit needed and making loan repayments more affordable.

The report also found most potential homeowners weren’t aware of these options and community housing providers faced barriers to scaling up their capacity to provide more homes.

If immediate barriers were removed, an estimated 10,000 extra shared home ownership houses could be built within three years.

Papamoa mum Ashlei McMahon is currently building her new home thanks to a partnership with Manawa Community Housing Trust.

“Before I found out about this option, I didn’t think I’d end up owning a home at all. But I put myself on the waiting list, and then I got the phone call to say I’d been accepted.

“It was life-changing.”

The Ngā Pōtiki Long Term Lease programme is a joint initiative between Manawa Community Housing Trust – a registered Community Housing Provider and the housing provider for Nga Pōtiki – and the Whai Kāinga Whai Oranga Government programme, established to speed up the delivery of Māori-led housing.

Ngā Pōtiki provides a cash subsidy and the land via a perpetual lease to assist whānau like Ashlei’s into home ownership. She owns the house and pays ground rent, set at an affordable level.

“This is the only way I could have done it, though. We can now be secure in our own home, and we don’t have to worry about the house being sold or having to move.”

Corlene Greenwood and her 19-year-old son Lyric live in their very own three-bedroom townhouse in Manukau City, Auckland, after Corlene successfully applied to be part of a shared home ownership scheme with the NZ Housing Foundation in 2022.

The NZ Housing Foundation helps New Zealanders into homes with alternative arrangements. Their shared equity model supports potential buyers by providing a percentage of the deposit for a share in the home, with the intention of the owner buying out the Foundation’s share over time. Westpac has worked closely with the NZ Housing Foundation to standardise this process.

Corlene contributed a 5% deposit, Te Tumu Kāinga charitable trust provided an equity contribution of 40% and NZ Housing Foundation provided her home. Corlene covered the remainder of the purchase price with a standard Westpac mortgage. As time has gone by she’s been slowly increasing her equity share, and will eventually own her home entirely.

Corlene Greenwood and son Lyric

Corlene had become tired of renting and wished for the financial and emotional security that owning a home brought, for her and her son.

“I wanted to have something where I knew I could control my expenditure, to know I wasn’t going to have my rent raised by an extra $100 every three months.”

“Just knowing that this house is going to be here for my son and my grandchildren is amazing. I have my foot in the door. I am an owner.”

Westpac NZ CEO Catherine McGrath said the bank was committed to supporting more New Zealanders into their first homes through the full range of options available.

“The number of shared equity and leasehold houses being offered by community housing providers is currently small, but the positive impact for families is large. This report shows that if key barriers are removed, these affordable options could help thousands more people get on the housing ladder.

“We already support community housing providers up and down New Zealand, but this report shows there are many areas that we, and the banking sector more widely, can improve, such as access to lending, consistent credit settings, and simplifying the process for the providers and home buyers.

“We’ve taken those insights on board and will also be sharing them with other banks, community housing providers and partners in Government.

“As part of this work, Westpac is committing to a $1 billion lending target over the next three years to support the sector to help more people into homes, and to support the people buying those homes.”