Is the dream of home ownership within your grasp? It could be more possible than you think! You may be eligible for government support to buy your first home… including a KiwiSaver HomeStart grant.
What is KiwiSaver HomeStart?
Have you been contributing to KiwiSaver? After just three years of contributions, you may be entitled to a KiwiSaver HomeStart grant, administered by Housing New Zealand. Grant values vary according to whether you’re purchasing an existing home (maximum $5,000 per eligible member, capped at max $10,000 per dwelling) or building or purchasing a new home (maximum $10,000 per eligible member, capped at $20,000 per dwelling).
Note: A ‘new home’ should be recently built and have had a code of compliance certificate for six months or under.
Am I eligible for a KiwiSaver HomeStart grant?
You may be able to apply for a KiwiSaver HomeStart grant if you, or anyone you may be buying a home with:
- have been contributing the required minimum amount to KiwiSaver for at least three years
- are aged 18 years or over
- have not already received the KiwiSaver HomeStart grant or its predecessor, the KiwiSaver first-home deposit subsidy
- have a household income (before tax) of $85,000 or less in the last 12 months (for sole purchaser), or $130,000 or less in the last 12 months (for two or more purchasers)
- The property purchase price is within the designated house price cap for the region
- have a deposit that is at least 10% of the purchase price, including the addition of the grant, KiwiSaver withdrawal amount, savings or family gifts supported by a gifting declaration
- are planning to live in the house for at least six months from the settlement or completion of the property.
Note: Regardless of the number of eligible KiwiSaver members purchasing a home together, 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.
See the Housing New Zealand website for the full criteria.
What’s involved in applying for a KiwiSaver HomeStart grant?
Think you meet the criteria? Great! If you’re actively house hunting we’d suggest applying for pre-approval. This is valid for six months and gives you peace of mind, knowing you can tap into that money when you find a property you want to buy.
We recommend setting up an online myIR account with Inland Revenue if you haven’t already. You can then easily download both your certificate of earnings and KiwiSaver contribution statement, which will both be needed as supporting documentation in your application.
The application process for a KiwiSaver HomeStart grant requires:
- proof of income (all purchasers/intended purchasers need to prove what you’ve physically earned in the last 12 months – most often a certificate of earnings from IRD will suffice, or a copy of your IR3 if you’re self-employed)
- KiwiSaver contribution statement (if you’re self-employed you’ll need to request this directly from your KiwiSaver provider)
- identification (i.e. copy of passport, birth certificate or drivers’ licence)
- copies of pay slips for the last two months
- a signed copy of an agreement for sale and purchase, a fixed price building contract or a contract with a builder/developer for a yet to be built property, if applicable*
- evidence that you have a deposit of at least 10% of the purchase price, if applicable*
- a proposed settlement date/grant payment date at least four weeks away, if applicable*.
* Not required if you are only applying for a pre-approval.
You can apply online via the Housing New Zealand website.
How long does it take to process an application?
It generally takes up to five working days to process an application, if you have provided the correct supporting documentation. However, seeking pre-approval for a grant is the best way to go – otherwise you’ll need to apply at least four weeks prior to settlement date. This can put a spanner in the works when you’re trying to make a quick purchase. Housing New Zealand will pay the grant by the day of settlement but can’t accept retrospective applications. Follow the good old Scout motto ‘Be Prepared’ and you should be fine!
How is the KiwiSaver HomeStart grant paid?
For most clients, the grant money is paid on the morning of settlement, directly to your solicitor. For new builds and properties purchased off the plans, the money can be paid in advance and held in trust and be released for settlement date.
Can I get pre-approval for a KiwiSaver HomeStart grant?
Yes, you can – in fact this is advisable. Your pre-approved grant is valid for six months, which gives you plenty of time to find a suitable property. It also means you know one way or the other whether you can count on this money for your big purchase.
How does the KiwiSaver HomeStart grant process differ from the KiwiSaver withdrawal process?
KiwiSaver first-home withdrawal means you can take out most of the money you, your employer and the Government contributed to KiwiSaver after at least three years in the scheme to purchase your first home – as long as you leave at least $1,000 in your account. You’ll need to apply to your KiwiSaver provider to do this.
Can the KiwiSaver HomeStart grant be used to purchase land I’m intending to build on?
This may be possible, but you’ll need to do your homework, including obtaining physical costs and building plans, or evidence from a quantity surveyor if you’re a builder intending to build the house yourself. Contact Housing New Zealand to learn more on 0508 935 266.
What other assistance is available in New Zealand for first time home buyers?
We have plenty of suggestions on our website on how first home buyers can fund their first home. For instance:
- If you have contributed to KiwiSaver for at least three years you may be able to withdraw some of your savings from your KiwiSaver account.
- The Welcome Home Loan is also designed to help first home buyers who have a smaller than the required deposit. If you’re eligible you might be able to get a home loan with a 10% finance deposit rather than the 20% required by most lenders. How much you can borrow depends on your lender, where you live in New Zealand and what you can afford. For further information go to www.welcomehomeloan.co.nz.
- If you’re Māori and have a right to occupy your multiple-owned Maori land and are looking to achieve home ownership you may be eligible for a Kāinga Whenua loan to build, buy or relocate a home onto your ancestral land. For further information around this scheme, go to www.hnzc.co.nz