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

One in three first home buyers in New Zealand have received financial help from the Bank of Mum and Dad, new reports claim.

A Kiwibank study has found high property prices are keeping young people out of the market - meaning more Gen Z and millennial buyers have turned to parental support to get on the ladder.

Lesley Harris from the First Home Buyers Club says the Bank of Mum and Dad remains the nation's biggest lender for young buyers.

"We're seeing such a massive disparity between people's incomes and ability to purchase a home, which is completely different to what it was 20 or 30 years ago."

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Episode Transcript

Speaker 1 (00:01):
So we've got new research from Kiwibank which shows that
the third of us have used the bank of mum
and Dad to get into our first home. And as
you'd expect, the numbers even higher for younger people. Sixty
five percent of gen Z homeowners had some sort of
financial help from their parents when they bought their first property.
So Leslie Harris as a director of the First home

(00:22):
Buyers Club and she joins me, now.

Speaker 2 (00:24):
Hella, Leslie, good afternoon, Andrew.

Speaker 1 (00:26):
This doesn't shock me. But what does shock me is
just how many kids are dependent on the parents.

Speaker 2 (00:31):
Well, it doesn't shock us at all. It's kind of
what we know. I mean, we saw some research that
came out all a couple of years ago that talked
about bank of Mum and Dad is actually our biggest
bank here in New Zealand. So we know that a
lot of people, you know, especially the young ones, are
relying on that contribution. But you know, we've also got
to go, well, aren't you lucky if you've got a

(00:53):
mum bank of mum and Dad. I mean not everybody
has that exactly.

Speaker 1 (00:57):
Yes, Well there's that old thing that rich get richer
and the poor get poorer and.

Speaker 2 (01:00):
For the real it's generational one.

Speaker 1 (01:02):
Generation, which it is. Yeah, Okay, is it happening more
now than in the past, has it? Has it been
exponentially rising over the last while, or has this been
happening for twenty thirty years.

Speaker 2 (01:13):
I don't believe it's been happening as as not nearly
as much as what we're seeing now. But we're seeing
such a massive disparity now between people's incomes and ability
to purchase a home, which is completely different to what
it was twenty or thirty years ago. It's really only
those very top income earners that we're seeing actually able

(01:36):
to actually get those mortgages and get into those homes.

Speaker 1 (01:39):
So is this a warning for anyone who's planning to
have kids or has just had kids that really you're
going to have to start thinking about making sure that
you're tithing off a certain part of your income to
help your kids, because it's going to be necessary.

Speaker 2 (01:52):
I think one of the things that I've talked about
a little bit before is that, you know, as a country,
really thinking about the impact on people's retirements. I mean,
if I look at myself, you know, three children, if
I've got to help all of those into their first homes.
Then really, my retirement's going to look actually quite different.
So this is a real New Zealand problem. It's not

(02:13):
just for the young ones getting into their homes. It
actually is going to impact our generation going into retirement
with what they've actually got to retire on.

Speaker 1 (02:24):
Do you have any facts and figures about how these
loans or gifts are structured? In fact, I'm going to
ask a different question, are these loans or are these gifts?

Speaker 2 (02:35):
Typically what we're actually seeing is gifts, because really if
they're loans, then it's not going to make that much
difference to the bank because it's still going to have
to be something that needs to be paid back. I mean,
one thing that the Keywi Bank report did touch on
is the importance of really having clarity amongst all parties

(02:57):
about is it a gift or is it a loan?
Because if it's and it's got to be factored into
the repayments and their affordability.

Speaker 1 (03:04):
Yes, but some people just don't believe in disclosure.

Speaker 2 (03:10):
Yeah, well, I mean that's but then you know, potential
impacts on families falling out if all of a sudden
they've got to start repaying something and they weren't clear
on that that's going to cause some issues.

Speaker 1 (03:21):
So do you have any sort of anecdotal stuff or
any empirical evidence about the contracts that might exist between
parents and children to ensure that the parents' money, that
their assets are not wasted.

Speaker 2 (03:35):
So one of the things that you know, I've spoken
about a little bit is anything like this. You know,
it's full disclosure, and you need to get the right
legal advice because there's a lot of implications. For example,
if I was to give to my son and then
he was married and then divorced, I wouldn't really want
that gift being split two ways. So things need to

(03:57):
be structured in a way so that the intention of
that gift is actually you know, preserved for the purposes
that it was initially intended. For.

Speaker 1 (04:06):
Our lawyers up to speed with this, and therefore they
have the forms, they have you know, the templates, so
that they can put in an agreement that will protect
the parents' money. Because're quite right that whole you know,
after the de facto, after the two years, a bit
of a split, half the money goes.

Speaker 2 (04:20):
You know, well, I think you know some very clear,
strong advice that we've seen being given that some sort
of prenup or something, you know, before entering into that
de facto relationship, if there was going to be a
significant gift for the house, so that it just all
needs to be thought about. It all needs to be discussed,
and we recommend getting proper legal advice from the experts

(04:45):
that know the stuff.

Speaker 1 (04:46):
Good stuff, and I thank you so much. Lesie Harris
is from the First Home Buyers Club, who knew that
there was a thing like that.

Speaker 2 (04:51):
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