Latest / Best of Business / Lesley Harris: First Home Buyers Club director on the Bank of Mum and Dad helping 1 in 3 Kiwis into first homes

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Lesley Harris: First Home Buyers Club director on the Bank of Mum and Dad helping 1 in 3 Kiwis into first homes · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. The'd be
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  Speaker 2: So we've got new research from Kiwibank which shows that
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  Speaker 2: the third of us have used the Bank of mum
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  Speaker 2: and Dad to get into our first home and as
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  Speaker 2: you'd expect, the numbers even higher for younger people. Sixty
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  Speaker 2: five percent of gen z homeowners had some sort of
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  Speaker 2: financial help from their parents when they bought their first property.
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  Speaker 2: So Leslie Harris as a director of the First home
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  Speaker 2: Buyers Club and she joins me, now Hella, Leslie, Good afternoon, Andrew.
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  Speaker 2: This doesn't shock me. But what does shock me is
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  Speaker 2: just how many kids are dependent on the parents.
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  Speaker 3: Well, it doesn't shock us at all. It's kind of
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  Speaker 3: what we know. I mean, we saw some research that
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  Speaker 3: came out all a couple of years ago that talked
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  Speaker 3: about Bank of Mum and Dad is actually our biggest
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  Speaker 3: bank here in New Zealand. So we know that a
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  Speaker 3: lot of people, you know, especially the young ones, are
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  Speaker 3: relying on that contribution. But you know we've also going
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  Speaker 3: to go, well, aren't you lucky if you've got a mum,
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  Speaker 3: bank of Mum and Dad I mean, not everybody has
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  Speaker 3: that exactly.
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  Speaker 2: Yes, well, there's that old thing that rich get richer
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  Speaker 2: and the poor get poorer, and.
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  Speaker 3: For the realm, it's generational one generation.
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  Speaker 2: Yes, yeah, Okay, is it happening more now than in
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  Speaker 2: the past? Has it? Has it been exponentially rising over
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  Speaker 2: the last while, or has this been happening for twenty
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  Speaker 2: thirty years.
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  Speaker 3: I don't believe it's been happening as as not nearly
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  Speaker 3: as much as what we're seeing now. But we're seeing
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  Speaker 3: such a massive disparity now between people's incomes and ability
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  Speaker 3: to purchase a home, which is completely different to what
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  Speaker 3: it was twenty or thirty years ago. It's really only
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  Speaker 3: those very top income earners that we're seeing actually able
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  Speaker 3: to actually get those mortgages and get into those homes.
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  Speaker 2: So is this a warning for anyone who's planning to
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  Speaker 2: have kids or has just had kids, that really you're
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  Speaker 2: going to have to start thinking about making sure that
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  Speaker 2: you're tithing off a certain part of your income to
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  Speaker 2: help your kids, because it's going to be necessary.
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  Speaker 3: I think one of the things that I've talked about
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  Speaker 3: a little bit before is that you know, as a country,
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  Speaker 3: really thinking about the impacts on people's retirements. I mean,
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  Speaker 3: if I look at myself, you know, three children, if
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  Speaker 3: I've got to help all of those into their first homes,
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  Speaker 3: then really my retirement's going to look actually quite different.
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  Speaker 3: So this is a real New Zealand problem. It's not
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  Speaker 3: just for the young ones getting into their homes. It
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  Speaker 3: actually is going to impact our generation going into retirement
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  Speaker 3: with what they've actually got to retire on.
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  Speaker 2: Do you have any facts and figures about how these
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  Speaker 2: loans or gifts are structured? In fact, I'm going to
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  Speaker 2: ask a different question, are these loans or are these gifts?
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  Speaker 3: Typically what we're actually seeing is gifts, because really if
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  Speaker 3: they're loans, then it's not going to make that much
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  Speaker 3: difference to the bank because it's still going to have
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  Speaker 3: to be something that needs to be paid back. I mean,
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  Speaker 3: one thing that the Keywi Bank report did touch on
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  Speaker 3: is the importance of really having clarity amongst all parties
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  Speaker 3: about is it a gift or is it alone? Because
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  Speaker 3: if it's alone, it's got to be factored into the
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  Speaker 3: repayments and their affordability.
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  Speaker 2: Yes, but some people just don't believe in disclosure.
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  Speaker 3: Yeah, well, I mean that's but then you know, potential
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  Speaker 3: impacts on families falling out if all of a sudden
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  Speaker 3: they've got to start repaying something and they weren't clear
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  Speaker 3: on that's that's going to cause some issues.
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  Speaker 2: So do you have any sort of anecdotal stuff or
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  Speaker 2: any empirical evidence about the contracts that might exist between
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  Speaker 2: parents and children to ensure that the parents' money, that
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  Speaker 2: their assets are not wasted.
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  Speaker 3: So one of the things that you know, I've spoken
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  Speaker 3: about a little bit is anything like this. You know,
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  Speaker 3: it's full disclosure, and you need to get the right
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  Speaker 3: legal advice because there's a lot of implications. For example,
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  Speaker 3: if I was to gift to my son and then
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  Speaker 3: he was married and then divorced, I wouldn't really want
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  Speaker 3: that gift being split two ways. So things need to
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  Speaker 3: be structured in a way so that the intention of
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  Speaker 3: that gift is actually preserved for the purposes that it
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  Speaker 3: was initially intended. For.
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  Speaker 2: Our lawyers up to speed with this, and therefore they
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  Speaker 2: have the forms, they have, you know, the templates, so
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  Speaker 2: that they can put in an agreement that will protect
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  Speaker 2: the parents' money. Because you're quite right that whole you know,
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  Speaker 2: after the de facto, after the two years a bit
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  Speaker 2: of a split. Half the money goes you know, well,
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  Speaker 2: I think you.
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  Speaker 3: Know some very clear, strong advice that we're seen being
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  Speaker 3: given that some sort of prenup or something, you know,
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  Speaker 3: before entering into that de facto relationship if there was
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  Speaker 3: going to be a significant gift for the house, so
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  Speaker 3: that it just all needs to be thought about, It
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  Speaker 3: all needs to be discussed, and we recommend getting proper
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  Speaker 3: legal advice from the experts that know the stuff.
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  Speaker 2: Good stuff, And I thank you so much. Lesie Harris
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  Speaker 2: is from the First Home Buyers Club, who knew that
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  Speaker 2: there was a thing like that.
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