First-home buyer grants are being revoked after recipients fail to meet eligibility criteria.

In figures released to the Herald under the Official Information Act, 24 first home buyers have had to pay back $123,000 in HomeStart grants after they failed the eligibility criteria since the scheme started in 2015.

The most common reason was failing to live in the house for the first six months, which affected 20 people. A relationship break-up affected two repayments and an incorrect assessment and a cancelled build were the remaining two reasons.

The grant provides eligible first-home buyers with a grant of up to $5000 for individuals or $10,000 for couples to put towards the purchase of an existing home. The grant is doubled if it is for a new home.

First-home buyers Michael and Arumia Hayles say the HomeStart grant and KiwiSaver helped them enter the property market. Photo / Stephen Parker
First-home buyers Michael and Arumia Hayles say the HomeStart grant and KiwiSaver helped them enter the property market. Photo / Stephen Parker

Housing New Zealand senior product analyst Iain Duncan said the proportion of people who are intentionally dishonest was very, very small. During the application process they gather a large amount of data and it was usually easy to spot a fraudulent application.

"My gut feeling is a really small per cent try to cheat the system.

"Fundamentally, most people who apply are genuine first home buyers. It's an awful hassle to go through to rort the system."

Duncan explained that they paid out the grant slightly before settlement, so a change in life circumstances just before or after settlement could result in repayment. A common reason was a relationship break-up that resulted in the grant recipient moving out of the house - this meant they failed the criteria to live in the abode for the first six months.

The KiwiSaver First Home Deposit Subsidy was launched in 2010 to help Kiwis into their first home. After another incarnation it was changed to the HomeStart grant in April 2015 to include an extra incentive to buy new builds, Duncan said.

"The Government wanted to see an increase in supply of new properties to encourage developers to build affordable housing. About 10 per cent of people are now applying for new builds."

Since April 2015, 80,000 applications have been approved and 39,000 have been paid out, amounting to $186 million.

The two dozen people in the assessments team get around 150 applications a day that they have to process in time for the sale to go through. If an application appears dodgy or if they get a tip someone is not being honest it is referred to their investigations team who look into it further.

• 18 years or over

• Currently do not own a home or land

• Have not received the KiwiSaver HomeStart grant or its predecessor before

• Have contributed to KiwiSaver for at least three years

• Earn either less than $85,000 as an individual or less than $130,000 as a couple

• Have a 10 per cent deposit

• The property is under the regional price cap

Sir Michael Cullen discusses Kiwisaver