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If you have not owned a house or land before, KiwiSaver is a great way to help save to buy your first home. If you have owned a house before but do not now, and are in a similar financial position as a “first home buyer”, KiwiSaver may also be able to help you. This is referred to as a “second chance”.

This article looks at the KiwiSaver rules for taking money out of your KiwiSaver Account, to help you buy your first home (known as a first home withdrawal). The article also looks at the additional government first home subsidy (first home subsidy). Both the first home withdrawal and the first home subsidy have separate rules and are administered by different organisations. Both help you secure your first home.

First home withdrawal – accessing your KiwiSaver money

If you have not owned land or a house before, by yourself or with someone else, you may qualify to take money out of KiwiSaver when you buy your first home.

If you have owned a house before, you may still qualify if the Minister of Housing considers that your financial situation (in terms of your income, assets and liabilities) is the same as what would be expected for a person who has not owned a home. In this case, you need to get a certificate through Housing New Zealand certifying this. Housing New Zealand’s contact details are at the end of the article. In deciding whether you qualify for the certificate, you must have realisable assets of less than 20% of the house price cap and your household income must be below the maximum household income level.

To be eligible to make a first home withdrawal from your KiwiSaver Account, you must have not made a withdrawal from KiwiSaver for this purpose before and:

• You need to have been a member of a KiwiSaver scheme for at least 3 years (note, the 3 years is the membership period and not the savings period), and

• The house you are purchasing must be intended to be your principal place of residence.

Three years’ membership is a specific requirement. Where a person was auto enrolled in KiwiSaver and did not make a specific decision to join a KiwiSaver scheme, the start of the 3 year period applies from the 15th of the month their contributions were first deducted from their pay. In other cases, it is when they first joined a KiwiSaver scheme.

Under the first home withdrawal provisions, you take out more than just the money you have personally saved. If you are eligible to make a withdrawal, you can withdraw everything in your KiwiSaver Account except the government-paid money (i.e. the $1,000 kick-start and the annual MTCs (Member Tax Credits)). This means you can withdraw all of your savings, the contributions by your employer and all of the investment earnings in your KiwiSaver account. Being able to access the employer contributions is a significant boost to the money available to help buy your first home. To find out how much you can withdraw, phone SuperLife.

It is important to note that the amount you take out of KiwiSaver is not paid to you, but to your solicitor’s trust account. To take the money out, your solicitor will have to provide a copy of the sale & purchase agreement and an undertaking that the money will be paid to the seller of the house. If the purchase does not go ahead for any reason, the money must be refunded by your solicitor to your KiwiSaver Account.

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First home subsidy

If you are eligible for the first home withdrawal under KiwiSaver, you may also be eligible for the extra first home subsidy from the government. The first home subsidy is separate from the first home withdrawal payment. It is managed by Housing New Zealand and not the KiwiSaver provider.

To qualify, you must have been saving in KiwiSaver for at least 3 years and your savings must have been at least 2% of your taxable pay. For non-working people, the savings have to have been at least 2%¹ of the minimum wage (about $510 savings a year). Couples can both qualify jointly. In fact, up to three people can apply for a subsidy for the joint purchase of a house.

The first home subsidy is $1,000 for each year you have saved in KiwiSaver, with a maximum of $5,000. The maximum applies after 5 or more years’ savings. The 5 years do not need to be consecutive. Where two people apply together, both can qualify for the maximum.

There are some rules. You must be 18 or older and:

• Your household income must be below the maximum household income limit i.e. $100,000 if 2 or fewer people are buying the home and below $140,000 if there are three or more buyers.

• The value of the house must be below the house price cap i.e. $300,000 ($400,000 in Auckland City, North Shore City, Rodney District, Wellington City and Queenstown Lakes District).

• If you are buying land to build a house, or buying an apartment not yet built, the house/apartment must be built within 12 months of the purchase of the land. You also need to be able to show the availability of the necessary funding required to build the house/apartment.

Remember, applications for the first home subsidy are processed by Housing New Zealand. It is possible to get “pre-approved” of your eligibility, if this is necessary to help secure a mortgage. Contact details of Housing New Zealand are:

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Using KiwiSaver to buy your first home

If you are thinking about using KiwiSaver to help buy your first home, you should get appropriate advice. Also, think about:

• joining KiwiSaver as soon as you can

• saving as much as you can afford to

• ensuring that in the year you make the withdrawal, you have saved the $1,043 for that year to maximise your annual member tax credit for that year. You can put in an amount and then take it out as part of the first home withdrawal.

If you have children, think about joining them up early to get them through the three year membership period.

[1] 4% prior to 1 April 2009.  3% from 1 April 2013.