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If you are eligible for the first home withdrawal, you may also be eligible for the first home subsidy. The first home subsidy is administered by Housing New Zealand, outside KiwiSaver. This article looks at the rules for the first home subsidy.

The first home subsidy is $1,000 for each year you've been contributing to KiwiSaver, up to a maximum of $5,000 after five years of saving. Note, the test is both length of membership of KiwiSaver, and whether you have been contributing the required contributions over a minimum of three years.

To be eligible for the first home subsidy you must be a member of a KiwiSaver scheme, or a complying superannuation fund, be 18 years or over, and have not received a first home subsidy before.

You must have contributed at least the minimum percentage of your income to a KiwiSaver scheme, complying scheme or exempt employer scheme for at least three years. The three years do not have to be consecutive. From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent of income. Since 1 April 2009, the minimum contribution has been 2 percent. From 1 April 2013, the minimum contribution becomes 3%.

There are some other rules:

- The first home subsidy is for first home buyers. However, you may still qualify for the first home subsidy if you can show that you are in the same position as a first home buyer. To qualify you must not have realisable assets totaling more than 20 percent of the defined house price cap for the area you are buying in. You must apply to Housing New Zealand for a determination that you are in the same position as a first home buyer.

- The first home subsidy can be used to buy a home, land to build a house on, or buy an apartment that is being built. You must be buying your first home, be planning to live in it, and must not currently own any other property.

- You must have a combined annual income of $100,000 or less (before tax) for one or two buyers, or a have a combined annual income of $140,000 or less (before tax) for three or more buyers.

- You must be buying a house under the maximum house price caps. The house price caps are:

• $400,000 for Auckland City, North Shore City, Rodney District, Wellington City and Queenstown Lakes District and

• $300,000 for all other areas. Note Auckland City does not include Manukau City and Waitakere City. These are included in the $300,000 maximum house price cap areas.

- If you are buying land and planning to build a house on it, or buying an apartment that is being built, you also need to meet the following criteria:

• be planning to live in the house or apartment.

• have the house built within 12 months of purchase of the land. You will need to supply a Code Compliance Certificate to show that this has been done.

• be able to show, if you are building on land or buying an apartment being built, that:

• You will have funding for the construction of the building

• The total cost of both the land and the house or apartment is within the house price caps

• The land or site is ready to build on.

To apply for a first home subsidy

You can apply for a pre-approval if you have not found a house or land to build on, but want to find out if you are eligible before you start house/land hunting.

Otherwise, you can apply for the first home subsidy directly if you already have found a house/land, and have a sale and purchase agreement.

Application forms are available on the Housing New Zealand website, www.hnzc.co.nz. Complete the form and return with the required documents (listed in the application form) to Housing New Zealand.

Housing New Zealand will require the following details:

Proof of earnings for the past 12 months

Proof of earnings is required from the applicant and for all other people purchasing the property.

If employed, you must provide a certificate of earnings or letter from your employer and your two most recent pay slips, clearly showing how much you have earned in the previous 12 months and how long you have been employed. Income is also considered to include:

• Work and Income benefits. You will need evidence from Work & Income

• Overtime and shift allowances

• Second job and casual employment. Additional letters from the employees and payslips are required.

• ACC payments and private insurance payments, such as income protection — evidence provided by ACC statements.

If self employed, you are required to provide:

• Your most recent financial statements, supported by business and personal tax returns. These should show the percentage of income contributed annually to your KiwiSaver scheme.

• Up to date interim financial statements if the end of the last financial year is more than six months ago.

• Proof of contributions to your KiwiSaver scheme (or other qualifying scheme)

This can include payment records from your scheme provider, letter from your employers, or financial statements showing the percent of income contributed (if self employed). If you don’t have these records, you can obtain them from your scheme provider or from the IRD website “manage my KiwiSaver”.

• Identification

Photocopy of passport or birth certificate.

• Sale and purchase agreement of the house or land you are buying

This is required if you have made an offer to purchase and now require the first home subsidy. You will require a witness when signing the application form unless you have pre-approval.

FAQ’s - first home subsidy

Can I get the first home subsidy if I am self-employed and in KiwiSaver?

Yes. If you are self employed, you will qualify for the first home subsidy, provided you make at least one contribution annually of at least the minimum percentage of your income over the qualifying period (3, 4 or 5 years) and meet the other requirements.

Can I get the first home subsidy if I am not employed but in KiwiSaver?

Yes. You will qualify for the first home subsidy if you make an annual contribution that is at least the minimum percentage of the adult minimum wage (currently $510), over the qualifying period (3, 4 or 5 years) and meet all other criteria.

Can I get the first home subsidy if I am a beneficiary and in KiwiSaver?

Yes. Provided you make an annual contribution that is at least the minimum percentage of your gross benefit and meet all the other eligibility criteria.

I work part-time for a couple of different employers. I have joined KiwiSaver with one of them. Can I still get the first home subsidy?

You will qualify for the first home subsidy if you have contributed the minimum percentage of your income for three years (does not need to be consecutive). You will also need to meet other conditions around income and house price. If you are contributing through only one employer, you must still ensure that you contribute through that employer and by voluntary savings, the minimum percent of your total income from all employers.

Is there a minimum age for the first home subsidy?

Yes, the first home subsidy is only available to individuals aged 18 years and above. However, contributions to your KiwiSaver account before you turn 18 will count towards your eligibility for the first home subsidy as long as they meet the minimum contribution requirements.

How does being on a contributions holiday affect my eligibility for the first home subsidy?

You must have been contributing to KiwiSaver for a minimum of three years, to be eligible for the first home subsidy. The three years do not have to be consecutive. For example, if you take a six month contribution holiday you will be eligible for the minimum first home subsidy after three-and-a-half years (i.e. the length of your contribution holiday is added to the minimum three years of contributions). You would be eligible for the maximum first home subsidy after five-and-a-half years of contributing to KiwiSaver.

Does the subsidy have to be repaid?

Not if you live in the house that you bought using the first home subsidy for at least six months. If you don’t live in the house for at least six months, the first home subsidy must be paid back and penalties will apply.

What is the minimum contributions percentage?

Between 1 July 2007 and 31 March 2009 the minimum contribution was 4 percent. Since 1 April 2009, the minimum contribution is 2 percent. From 1 April 2013, it becomes 3%.

How much is the first home subsidy?

The first home subsidy is $1,000 for each year you have saved, to a maximum of $5,000.

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