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Kiwisaver rules for first home buyers

Changes to the Kiwisaver Rules came into effect on 1 April 2015.

From that date, if you have been contributing to KiwiSaver for 3 years or more, your Kiwisaver withdrawal may include:

  • your members contributions
  • any employer contributions (voluntary and compulsory)
  • any returns on investment(s) received
  • any member tax credits.

You may also be eligible for a Kiwisaver HomeStart Grant. The value of the grant differs depending on whether you are purchasing an existing home or building new.

Years of contributing Existing home New build
3 $3,000 $6,000
4 $4,000 $8,000
5 or more $5,000 $10,000

To qualify for Kiwisaver HomeStart Grant:

  • earnings cap of $120K(couple)/ $80K (single) 
  • A deposit of 10% or more
  • price cap on house - $450K (WN & Hutt) $350K (Wairarapa)

What was the reason behind the new rules, and what will the effect be on the local economy?

The Government’s stated aim is to increase the supply of new houses. It expects the number of purchasers accessing the Kiwisaver HomeStart grant to double from 10,000 to 20,000.

How will this work in practice in the Wellington region?

If we take an imaginary couple, who each earn $50,000 a year and have contributed to Kiwisaver for more than 5 years, and say they choose to build their first home in Wellington or the Hutt, they could get:

  • $20,000 HomeStart grant
  • $35,000 Kiwisaver withdrawal

That’s a total deposit of $55,000, which is a 12% deposit on a property worth up to $450,000 (property cap), and which also brings the Welcome Home Loan Scheme into play (as there is 10% deposit or better).

Apart from the $100,000 increase in the maximum purchase price in Hutt City and the Hutt Valley, the main benefits of the new HomeStart Grant appear to be accruing to those on moderate incomes who choose to build their first homes (rather than buy an existing home).

How can parents assist children into their first home?

Even with the changes to the amount of the grant, the LVR restrictions mean that first home buyers will often require family assistance to buy their first home.

We recommend speaking with one the The Conveyancing Company’s brokers to work through the options available.  See our website www.toconvey.co.nz for details.

Restrictions when using Kiwisaver

It important to note the restrictions on purchasing property using the HomeStart Grant:

  • You cannot purchase a company share flat
  • You must live in the house you buy (it cannot be an investment property)
  • You must buy the house in your personal name(s) – not in a trust.  This will have implications for those who wish to place property in trust to protect it from future relationship property claims, and will mean that first home buyers will need to consider entering into a Contracting Out Agreement with their partner in order to protect their equity in the property.
  • If you have previously had an interest in a home (e.g. you lived with someone for more than three years in a house owned by them, and then separated and received half the equity in that home) you will not be eligible for the withdrawal or the HomeStart grant (though you may qualify for a second chance).

However, you may use the grant to build on Maori land, and having an existing interest in multiply-owned Maori land will not necessarily disqualify someone from obtaining a HomeStart grant.

Contact the experts

If you have any questions about the Kiwisaver Withdrawal or Kiwisaver HomeStart Grant, contact the experts at The Conveyancing Company (a division of Gibson Sheat Lawyers), who will be able to step you through the process.

Marie Colling, Senior Legal Executive  +64 4 916 7484 and Alex Kirkwood, Legal Executive  +64 4 916 7700.

Lower Hutt 
Paula Campbell, Legal Executive   +64 4 916 6454 and Fran Zhao, solicitor  +64 4 916 6449.

Lisa Searle, Legal Executive  +64 6 370 6480

Our specialists have all the knowledge and expertise you need to ensure that you have all the bases covered when buying your first home.