The Government is planning to support New Zealanders with KiwiSaver to purchase a home by:

• Providing a first home subsidy
• Enabling home buyers to put their own savings in a scheme towards a deposit.

First Home Benefit

You may receive a benefit of an amount no greater than the value of your Member's Accumulation, excluding the $1,000 Government contribution and any Member tax credits, for the purpose of purchasing a first home.

The proposed first home deposit subsidy is $1,000 for each year that a member has been making regular contributions to a KiwiSaver scheme (maximum $5,000). The member will have to have been saving for a minimum period of three years to access this deposit subsidy.

However, the Government has recently announced that the first home deposit subsidy will be restricted by income price caps and regional house price caps.

• For a member of a KiwiSaver scheme to receive this subsidy the member must have gross household income of less than $100,000 per year (for one or two people), or less than $140,000 per year (for more than two people).
• The member must also be purchasing a lower priced home.

The Government proposes reviewing these qualifying criteria in 2009. Any first home deposit subsidy will be payable by the Government and not the relevant KiwiSaver Scheme.

Under the KiwiSaver Act you are eligible to make a withdrawal for the purpose of purchasing a first home where you have not previously received such a benefit from any KiwiSaver scheme and you satisfy one of the following criteria:

• at least three years have passed since the IRD first received contributions for credit to a KiwiSaver scheme of which you are or were a member; or
• where no such contributions have been paid via the IRD, you have been a member of a KiwiSaver scheme for a period or 3 years or more.

If you are eligible to receive such a benefit, the following criteria also apply before you are entitled to receive the benefit for the purchase of an estate in land (whether by yourself, or with another person).

• the land is, or is intended to be, your or your family's principal place of residence and you have not, at any time before applying to receive such a benefit, held an estate in land (whether alone or as a joint tenant or tenant in common) except in certain circumstances relating to holding an estate in land as a trustee; or
• the land is, or is intended to be, your or your family's principal place of residence and you are a "qualifying person" under the regulations made under the KiwiSaver Act; or
• the purchase is made in the circumstances prescribed in the regulations under the KiwiSaver Act

You are entitled to make a withdrawal for the purpose of purchasing a first home, the benefit will be paid to your solicitor. The Trustee may require from your solicitor, before payment of the benefit,

• a copy of an agreement for the sale and purchase of land showing you as the purchaser;
• an undertaking that the funds from the benefit will only be paid to the vendor as part of the purchase price or returned to tthe Scheme if settlement is not completed.

Previous home owners

If you have previously owned a home, but no longer have a share in a property, you may also be eligible for the first home withdrawal and the deposit subsidy - as long as you:

Have not received either the first home withdrawal or the deposit subsidy before; and are in a similar position to first home buyers in terms of assets, income and liabilities. This recognises that some people no longer own a home due to adverse circumstances such as redundancy, illness or relationship break-up, and ensures that these people are not excluded.

Those who have previously owned a home will need to apply to Housing New Zealand for a determination that they are in a similar position to first home buyers.

More detailed eligibility criteria, based on assets, income and liabilities will be developed before 1 July 2010 when the first KiwiSavers will be eligible to take up the first home withdrawal and deposit subsidy (based on the requirement for a minimum of three years membership and contribution).

The criteria will be to ensure that people who are simply moving home, or trading up, will not be able to access the deposit subsidy and first home withdrawal.

The KiwiSaver Mortgage Diversion scheme

Budget 2009. The KiwiSaver mortgage diversion facility is to be closed to new applicants from 1 June 2009.

The mortgage diversion facility allowed KiwiSaver members after 12 months to divert a fixed amount of up to half of their contributions to go towards payment of a mortgage on their "main" home. Employer contributions can not be diverted and the sum diverted is ineligible for a matching government contribution.

Not all KiwiSaver providers or mortgage lenders support this facility. For further details - see www.ird.govt.nz    

Q and A 

If you have been contributing around 4% of your income to KiwiSaver or an approved alternative superannuation scheme, you may be entitled to a first home deposit subsidy from the government through Housing New Zealand.

The subsidy is $1,000 for each year of membership in the scheme, up to a maximum of $5,000 for five years for each member. The eligibility criteria are set by Housing New Zealand and will include household income and regional house price caps (outlined in general terms below).

The first deposit subsidies will be paid out in 2010 to people who started KiwiSaver contributions in 2007.

First home deposit subsidies will become available from July 2010 to members who joined KiwiSaver in July 2007. They must have regularly contributed around 4% of their income for three years to become eligible to apply for the subsidy (ie, regularly contributing from 2007 to be eligible for the subsidy in 2010, at the earliest).

To be eligible for the first home deposit subsidy, you must:

• Be a member of a KiwiSaver scheme, or a complying superannuation fund
• Have a household income (before tax) of less than $100,000 per year (for one or two people), or less than $140,000 per year (for more than two people)
• Be purchasing a lower-quartile priced home.

The eligibility criteria relating to the income caps and regional house price caps will be reviewed in 2009 before the policy takes effect.

The deposit subsidy is for first home buyers or previous buyers (second-chance) who intend to live in the house for six months or more. You will have to meet some criteria in order to be eligible for the housing deposit subsidy, for example an income test and a lower house price.

You can have a maximum household income of $100,000 per year if it is for one or two KiwiSavers.

You can have a maximum household income of $140,000 per year if it is for three or more KiwiSavers.

After being a member of KiwiSaver for three years you can withdraw all or part of your savings and accrued interest to put towards buying your first home.

The first home deposit subsidy is $1,000 per year of membership in the scheme, up to a maximum of $5,000 for five years.

If you have a partner and you both save through KiwiSaver for at least three years, you can combine your deposit subsidies with what you have saved to put toward buying your first home. So after five years saving, a couple could get up to $10,000, provided they have a total household income below the income cap and meet the house price cap.

No. However if you don't live in the house that you bought using the deposit subsidy, it must be repaid and in some cases there may be a penalty imposed. KiwiSaver cannot be used to purchase an investment property.

Housing New Zealand is designing the first home deposit subsidy and will administer it from 2010.