ANZ’s new guidelines for the treatment of developer cash contributions

On 22^nd May 2024, government announced the Kāinga Ora First Home Grant was getting the chop. At 1:00pm that afternoon, applications closed—and that was it, over and out. 

It was an abrupt and unceremonious end to a scheme which had been giving eligible Kiwi a leg up onto the property ladder since 2010. 

But, as the saying goes, with change comes opportunity. In this case, for developers

Since the announcement, some developers have started to offer their own cash contributions as a purchase incentive for first home buyers, filling the gap left by the First Home Grant—and helping to generate buyer interest in the process.

As a result, lenders are now starting to make changes to their criteria around what’s acceptable (and what’s not) as a source of buyer deposit, to allow for developer contributions. 

ANZ recently became the first major lender in New Zealand to release specific guidelines around the handling of developer cash contributions

If you’re thinking of jumping on this opportunity, here’s what you need to know about ANZ’s new rules, to help ensure that the funding process goes smoothly for you and your buyers:

Max contribution $10,000: contributions must be capped at $10,000 per individual applicant, per binding Sale & Purchase agreement. 

Clear terms & conditions: the Sale & Purchase agreement must clearly outline the terms of the cash contribution, including:

• No claw backs: there must be no clawback conditions relating to the contribution—i.e. it cannot be contingent on the buyer meeting other requirements post-settlement. 
• No cash backs: Similarly, funds designated as developer “cash backs” (i.e. to help with furnishing the property after purchase) will not be accepted by ANZ as a source of deposit. 

Handling of funds: once the contract has gone unconditional, funds must be deposited into the buyers’ solicitors’ trust account—and the solicitor must then confirm receipt of funds directly with ANZ.

5% genuine savings still required: developer contributions will not count towards the 5% ‘genuine savings’ required by ANZ for low-deposit loans, where the LVR is greater than 80%. Buyers will still need to be able to demonstrate that they have saved at least 5% of the purchase price as genuine savings (which can include KiwiSaver).

If you have any questions about these changes, get in touch to organise a chat with one of our team of development specialists today.