If you are thinking of making your first home a new one then the good news is that you can get a good boost in funds from Kiwisaver. In fact, you can access more funds towards building or buying a new home than if you were to purchase an existing one.
KiwiSaver has two features to help you build your first home: The KiwiSaver first-home withdrawal and the KiwiSaver HomeStart grant
Changes to the KiwiSaver first-home withdrawal were introduced on 1 April 2015. Under the old rules you could only take out any savings that either you or your employer contributed (including any returns), to buy your first home. In contrast, the new rules allow you to access the government's contributions as well as your own (with the exception of the Government $1,000 kick-start). This is available regardless if you buy new or build, and there are no limitations on property value. Eligibility criteria apply including the requirement that you have been a member of KiwiSaver scheme for a minimum of 3 years. If you are still a few years away from building or buying your first home, then this is an incentive to join KiwiSaver if you haven't already.
If you are buying your first home and are wanting to withdraw your KiwiSaver contributions, all you need to do is apply directly to your KiwiSaver scheme provider for the first-home withdrawal.
If you have previously owned a home, but consider yourself to be in the same financial position as a first home buyer, then you can apply for approval from Housing New Zealand to be considered for the grant. Housing New Zealand will have to determine whether you are in the same financial position as a first home buyer, in terms of assets and income. To apply, you will need to complete an application and submit it to Housing New Zealand for assessment. If you get approval you can then apply to your KiwiSaver scheme provider.
The KiwiSaver HomeStart grant was introduced on 1 April 2015, replacing the KiwiSaver first-home deposit subsidy, and provides another option to fund your home deposit. The KiwiSaver HomeStart grant is administered by Housing New Zealand, meaning that the HomeStart grant is a separate application with a separate set of criteria. The new rules for this initiative state that if you earn less than $80,000 (for singles) or $120,000 (for couples) and the purchase price of the home is under the maximum price caps, then you could be eligible for the KiwiSaver HomeStart grant.
All regions are based on the Territorial Local Authority boundaries. The house price caps are:
Auckland – $550,000
Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Nelson City, Tasman District, Waimakariri District, Christchurch City, Selwyn District, Queenstown Lakes District - $450,000
Rest of New Zealand – $350,000.
If you have been contributing to KiwiSaver for 3 years and want to build a new home, you may be eligible for a grant of up to $6,000 for individuals and $12,000 for couples. This increases to $8,000 ($16,0000 for couples) or $10,000 ($20,000 for couples) if you have been a KiwiSaver contributor for 4 or 5 years respectively. In contrast, if you were buying an existing home, the grant value halves. This provides a big incentive to build or buy a new home.
Applicants can use the HomeStart grant to purchase a section and then build on that section. The grant funds would be paid out on settlement of the section. However, be aware that at the time of application, the applicants would have to provide a fixed price build contract confirming the cost of the build so that the full cost of both land and build could be assessed against the maximum house price caps. If you already own a piece of land, then you cannot apply for a HomeStart grant as you are treated as someone who already owns a property, so make sure you get organised with an application BEFORE you purchase a section (or your section comes to title, if buying from a developer).
- Land must be purchased as a vacant residential section.
- The new house must be built within 12 months of the land purchase being settled.
- When purchasing a house and land package off the plan, a new house must be built within 12 months of the date on which the first home buyer entered into an agreement to purchase the house and land package.
- You will live in the house as a primary residence for at least 6 months.
The KiwiSaver HomeStart grant is administered by Housing New Zealand. Applications should be sent to Housing New Zealand no later than four weeks/ 20 working days before settlement or any earlier required payment date. Apply online via the Housing New Zealand website.
Again, you could still possibly access a HomeStart grant if you are assessed to be in the the same financial position as a first home buyer.
Buying or building a new home is a great investment, and it is a positive move that the government is encouraging first home buyers to do so. Newer homes provide superior warmth and air quality and are especially important for young families. For more information on the Kiwsaver HomeStart Grant, particularly around buying land to build on, visit the KiwiSaver website.