KiwiBuild homesellers who break the rules can keep 70%

But there will be a get-out clause for people who have to sell in a difficult situation like a death, illness or relationship break-up.

Responding to a Newshub story highlighting the ability to keep any part of the capital gain from such a sale, Twyford said buyers would sign contracts stopping them selling their house within three years “without the express permission of the KiwiBuild Unit”.

The unit can and would prevent a house sale to enforce the rule, if necessary, he said in emailed comments to BusinessDesk.

“If a buyer breaches their contract, and secretly sells their home without the permission of the KiwiBuild Unit, then they will be liable for contractual damages of 30 percent of the capital gain,” he said. The money will go to the government.

Taking the whole gain would not have been fair, since a secret seller might struggle to buy a new home in a rising housing market if they couldn’t keep any of their capital gain.

Opposition MPs have leapt on the issue as they seek to discredit the KiwiBuild policy, under which the government aims to build 100,000 affordable homes within 10 years. Twyford was forced last week to defend the fact that people on annual household incomes of as much as $180,000 can buy the homes, after the first KiwiBuild dwelling was sold to an upwardly-mobile, middle class couple.

“This isn’t what KiwiBuild was originally planned for, and now it’s even more confusing as to why the scheme is here at all,” said the National Party’s associate finance spokesman Andrew Bayly. “Minister Twyford hasn’t listened to New Zealanders about the types of homes they want and where they want them, so allowing them to sell the property and pocket most of the profit is his solution.”

Twyford said today that KiwiBuild home buyers will also give the government 30 percent of any rent they receive if they rent the entire property within three years of purchase, unless they have prior consent from KiwiBuild..

“We have done this to make sure KiwiBuild is fair and available for those who need it – first homebuyers who want to own their own home,” said Twyford. “This will stop anyone looking to quickly flick off KiwiBuild homes for capital gain.”

However, there needed to be provision for people whose circumstances change through a death, injury, illness or relationship breakdown.

“KiwiBuild has the ability to consider circumstances on a case-by-case basis and work compassionately with families. This strikes the right balance between a community that rightly expects KiwiBuild homes will go to those who need them, and the fact that life is complicated and unpredictable,” the minister said.

A spokeswoman clarified that situations would be judged on a case-by-case basis and that the 30 percent capital gain return would not necessarily be required in all circumstances.