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GTODD LAW's Summary of the Recent Kiwisaver Amendments - Making it Easier to Purchase Your First Home - Thu, 16 April 2015
GTODD LAW’s Summary of the Recent Kiwisaver Amendments - Making it Easier to Purchase Your First Home
Changes to Kiwi Saver withdrawals and the introduction of the KiwiSaver HomeStart grant.
As of 1 April 2015 KiwiSaver has two features to help you buy your first home, the KiwiSaver first-home withdrawal and the KiwiSaver HomeStart grant. A number of changes have been made to the KiwiSaver first home withdrawals. The KiwiSaver HomeStart grant has replaced the old KiwiSaver First Home Deposit Subsidy.
The KiwiSaver withdrawal rules for first home buyers have been extended so that eligible KiwiSaver members will be able to withdraw the annual member tax credit paid by the Government, as well as their own contributions and those made by their employers.
The Government’s $1,000 kick-start is not included in the changes, in order to keep the KiwiSaver member’s account open and active after the withdrawal of eligible funds.
The KiwiSaver withdrawals feature is still contingent on an intention to live in the property. It cannot be used to buy an investment property.
KiwiSaver HomeStart Grant
How does the HomeStart grant work?
- After three years of contributing to Kiwisaver or another approved scheme you may be entitled to the HomeStart grant.
- If you are purchasing an existing/older home, the HomeStart grant is $1,000 for each year of contribution to the scheme:
- o 3 years of contributing = $3,000 (the minimum you can get)
- o 4 years of contributing = $4,000
- o 5 years of contributing = $5,000 (the maximum you can get).
- If you are purchasing a new home, a property bought off the plans or land to build a new home on, the HomeStart grant is $2,000 for each year of contribution to the scheme:
- o 3 years of contributing = $6,000 (the minimum you can get)
- o 4 years of contributing = $8,000
- o 5 years of contributing = $10,000 (the maximum you can get).
- There is a maximum amount that the combined land and new home can cost. The house price caps are:
- o Auckland – $550,000
- o 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
- o Rest of New Zealand – $350,000.
- A home which received its building code compliance certificate less than six months before Housing New Zealand receives a HomeStart application is considered a new home. The certificate must relate to the home as a whole and excludes partial building work on the home. The purchase of a vacant residential section and planning to relocate an existing/older house on the site does not constitute a new build property and will only be eligible for the existing/older home HomeStart grant (of between $3,000 - $5,000).
- In cases of properties being bought off the plans, the HomeStart grant may be paid out prior to settlement to assist you with the initial payment or progress payment required as stated in the agreement you have entered into. In these cases, the grant must be held in trust, in escrow or similar arrangement, with payment to the developer only on settlement. Before signing any contract or agreement, you should always seek legal advice. Applications should be sent to Housing New Zealand no later than four weeks/20 working days before settlement or an earlier payment date if required.
- You can apply for pre-approval of your HomeStart application without having found a particular house.
- If you live in the house you have bought for a minimum of six months from settlement date or if you use the HomeStart grant to purchase land to build a house on, and live in that house for a minimum of six months from the issue of the code compliance certificate for that house, then the HomeStart grant does not need to be paid back. If you move out before the relevant six month period ends, you may be required to pay the HomeStart grant back, with interest.
- You can also buy a property with other people, who may or may not be KiwiSaver members. If they are members, you may all qualify for HomeStart grants. However, no more than $10,000 worth of grants will be paid for the purchase of an existing/older property and no more than $20,000 for a new home or for the purchase of land on which a home will be built.
- You can only receive the HomeStart grant or its predecessor, the KiwiSaver deposit subsidy, once.
If you are considering buying a property we recommended that you obtain legal advice before signing the agreement. Please do not hesitate to contact us at GTODD LAW the property experts.
(The information contained in this new piece is taken directly from the Housing New Zealand website found by clicking on the following link and does not constitute legal advice. If you require legal advice please contact us directly. There are eligibility criteria applicable to the KiwiSaver Home Start grant that is not listed in this news piece. See http://www.hnzc.co.nz/buying-a-house/KiwiSaver-helping-you-into-home-ownership/kiwisaver-homestart-grant).