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Increased benefits for First Home buyers
 
Q.           My boyfriend and I were interested to read about the changes to KiwiSaver for First Home buyers. Would we qualify for the HomeStart grant? We have been KiwiSaver members since we were 16, but have only been contributing through our wages since we graduated and started working full time 12 months ago. We are now 22 and 23. 
 
A.          The KiwiSaver HomeStart grant replaces the KiwiSaver First Home deposit subsidy from April 1, 2015 and means that individuals can get up to $10,000 for buying or building a new home.   There is no increase to the amount available to someone buying an existing dwelling, this remains at $5,000 for one person or $10,000 for a couple who both qualify.   Housing New Zealand updated their booklet “Buying your First Home with Kiwisaver” and this is worth a read.
 
In your case, you will need to save into KiwiSaver for at least 3 years to qualify for the HomeStart grant, and 5 years to get the maximum available. As part of the application process, you need to have a savings history. Working people must have contributed at least the minimum allowable percentage of total income to a KiwiSaver scheme for at least three years. From 1 April 2013 the minimum contribution was increased to 3 percent (from 1 April 2009 to 31 March 2013 it was 2 percent, and prior to this 4 percent). 
 
Beneficiaries need to contribute 3 percent of their yearly benefit and non-earners the equivalent of 3 percent of the minimum wage. If while you were students you had contributed $20 per week, not only would you have received full Member Tax Credits each year you should also have contributed enough to apply for the HomeStart grant. Of course most students do not have $20 to spare, but for those that do this is worth considering.
 
In your case your savings history started when you commenced your current employment, so you will need to wait another two years before you can apply, or another four years to get the full amount if you meet all the eligibility criteria. The savings years do not have to be consecutive, as long as together they add up to at least 3 years of eligible contributions.
 
There are other eligibility criteria to qualify for the HomeStart grant. Your income over the past 12 months at the time of application has to be below $80,000 for an individual or $120,000 for two or more people. Your timeframe may present a challenge for you as it is entirely possible that two graduates could be earning $120,000 between them after 5 years of employment, in which case you would not qualify. A 'price cap' applies so applicants can only buy houses within the price range.  It is higher in Auckland than Hawkes Bay. 
 
If you do not qualify for the HomeStart grant, there is also the KiwiSaver First Home Withdrawal which simply requires that you have been a member for at least 3 years. Since April 1, 2015 all KiwiSaver members looking to buy their first home can apply to withdraw all their savings from KiwiSaver including all Member Tax Credits and investment returns. The only money they cannot withdraw is the $1000 ‘kickstart’ from the Government. 
 
These changes are aimed at helping New Zealanders into home ownership. It is possible that there may be further changes to the eligibility criteria in the future, so check in with Housing New Zealand or your fund manager from time to time to re-assess your situation.
Hawkes Bay Today 14 April 2015
 

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to
shelley.hanna@peak.net.nz