First-home help comes with catch

State housing sell-offs are not new and the previous Labour-led Government sold 1280 HNZ properties in its time in charge. Photo / Hagen Hopkins

Government's deposit offer for state houses in regions is focused on wrong parts of country, say critics.

First-home buyers have been thrown a lifeline in the form of a subsidised, vacant state house, but it comes with a catch - they'll have to move to the regions.

On the day the Reserve Bank introduced restrictions that will make it harder for some to purchase a home, Housing Minister Nick Smith revealed that 400 unwanted state houses would be sold off in provincial centres and buyers would be gifted up to $20,000 for a deposit.

On Monday, 41 of the Housing New Zealand properties will be offered to first-time buyers who earned the average wage or less and committed to staying in the house for at least three years.

The houses were all over the country, with the largest number in Northland, Waikato and the central North Island.

Critics, including National's coalition partner Act, said the initiative was costly, small in scale and focused on the wrong parts of the country. Act leader John Banks said it was a poor use of taxpayers' money to subsidise buyers in areas where the housing crisis was the least pronounced.

Labour housing spokesman Phil Twyford went further, describing the scheme as a "joke" which was designed to distract from the impact of the Reserve Bank's changes. The restrictions on lending, which came into force yesterday, meant most people would need a deposit of 20 per cent to get their mortgage approved.

Dr Smith argued that the initiative would not only help modest income earners get on the property ladder, it would free up capital to invest in social housing in high-demand areas.

The initiative was nearly cost-neutral because HNZ would no longer have to pay for rates, maintenance and repairs on the empty homes. The corporation was expected to make a loss of $152,000 on the first 100 homes to be sold.

The minister stressed that state housing sell-offs were not new and the previous Labour-led Government sold 1280 HNZ properties in its time in charge.

Green Party co-leader Metiria Turei contested the idea that Government had a surplus of state houses. She pointed out the waiting list of 58 people in Blenheim, where the first state house would be sold under the FirstHome scheme.

Greens believed that government should be hugely expanding its state housing stock. The Government said the total number of state houses was irrelevant. It was focused on providing housing in high-demand areas.

The National-led Government has also committed to building 2000 new state houses in two years. This would require a significant upscaling because just 200 state houses had been built in the last two fiscal years.

A spokesperson for Dr Smith said yesterday that HNZ had begun work on 621 homes and had contracts in place for another 513 homes. The corporation expected to hit the target of 2000 homes in June 2015.

The FirstHome initiative was one part of a housing policy which included changing the Resource Management Act to free up land and increasing the eligibility for KiwiSaver first-home subsidies and the Welcome Home Loan.

Where will the state houses be sold?

* Northland - 63
* North Waikato - 14
* Rotorua/Whakatane/Taupo - 31
* Hawkes Bay - 27
* New Plymouth/South Waikato - 67
* Manawatu/Levin/Wanganui - 46
* Kapiti - 19
* Marlborough - 17
* Canterbury - 26
* Otago - 27
* Southland - 23.