Sunday, February 25, 2024

BNZ unveils shared ownership scheme


Bank of New Zealand has launched its shared home-ownership scheme aimed at getting people into their first homes

BNZ has unveiled its shared ownership scheme aimed at getting people into their first homes, and already 200 people have signed up to express their interest.

The bank said last year it was working on a shared ownership scheme, in which first home buyers, who did not have a full 20 per cent deposit, would team up with investors to co-buy a property.

Now the bank said it had signed up YouOwn as a partner for the scheme.

The shared ownership scheme is not for low-income buyers, however, YouOwn founder Nigel Spratt said the key target market was “key workers” like police, nurses, teachers, paramedics, and firefighters with household incomes starting at around $120,000.

Spratt said the scheme would work by YouOwn providing enough capital to get buyers up to a 20 per cent deposit, so if a couple had an 8 per cent deposit for a home, YouOwn would contribute the remaining 12 per cent portion of the deposit.

The minimum contribution by couples would be 5 per cent.

The co-buying couple would then be responsible for paying the BNZ home loan, and also a 4.95 per cent per annum charge to YouOwn on the capital that it contributed.

There would be a review after five years, at which point, all being well, the co-buying couple would buy out YouOwn’s stake in the property, including its share of any capital gains.

Spratt said they started running this 12 months ago, and purchased 15 houses, but the business was aiming to co-buy at least 50 properties this year.

The homes it was taking a stake in were new homes, but in time the scheme would broaden to include older houses.

If homebuyers ran into financial trouble, and could not continue paying the mortgage, Spratt anticipated YouOwn buying them out, rather than a mortgagee sale being held.

BNZ’s chief customer officer, Paul Carter said they have been working to create a unique option for new home owners.

BNZ said there was huge interest in shared ownership. Since announcing the shared-ownership plans in December, the BNZ video explaining how shared-ownership works here had been watched just over 34,000 times.

New Zealanders are interested in exploring different ways of getting into their first home and shared ownership is another way BNZ is supporting them with, said Carter. It is aiming to get people into its Auckland pilot programme within a few weeks.

Shared-ownership is new to many New Zealanders, so they will be taking the time to make sure everyone understands how it works. After the launch, they will be looking to expand the Auckland pilot programme to other areas and other types of properties beyond new-builds.

The launch of the scheme could also result in a new form of investment. Spratt said later this year YouOwn planned to start raising money to expand the shared ownership scheme by launching an investment fund.

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