Site Designed By Airnet
          Contributions do not have to be consecutive to qualify for HomeStart

Q.        My parents signed me up to KiwiSaver in 2007 while I was still at school. During my years at uni I contributed from part-time jobs. Since finishing my degree two years ago I have been working full-time and putting in 3%. My boyfriend and I are talking about buying a house one day, but we would like to go overseas for two years at the end of next year. If we contribute for 3 years before we go away, and then another two years when we get back, will we qualify for the full HomeStart grant? An extra $10,000 between us would be a big help. But I have heard that that contributions have to be consecutive, without any interruptions. Is that the case?

A.       Last week I went along to the KiwiSaver Roadshow in Havelock North, presented by Housing Minister Hon Nick Smith and senior staff from Housing New Zealand. 
I took the opportunity to ask a staff member for an answer to this question, as I too have heard conflicting views on this. He assured me that contributions do NOT have to be consecutive. Housing New Zealand adds up all the periods during which you have contributed and if it equates to at least three to five years of contributions at the minimum allowable percentage of your total income then you should be eligible on that point. The staff member pointed out that many people have interruptions to their working lives, and it would be difficult to contribute without a break for 3 to 5 years. 

There are other eligibility criteria, such as being over 18, not having received the HomeStart grant before, belonging to KiwiSaver (or other complying fund), earning less than $80,000 p.a. for an individual or $120,000 per annum for a couple) and having a deposit that is 10 percent or more of the purchase price. This can include your KiwiSaver withdrawals and the HomeStart grant.

You can buy a property in fee simple, leasehold, stratum estate, cross-lease or multiple-owned Maori land.
A person who has contributed at least the minimum allowable percentage of their total income to KiwiSaver (or other complying fund) for the equivalent of three years may get a HomeStart grant of $3,000 with a further $1000 for each year up to 5 years. If you are considering building a house then the HomeStart grant is even more generous – up to $10,000 for an individual or $20,000 for a couple.

The challenge for you may be to meet the income limit, if you are both working professionals you may be nudging the upper edge of the band in 5 years’ time, so keep an eye on the limit and any changes that may occur over the next few years.

If when you return from overseas you find that your income is too high you may not qualify for the HomeStart grant, but under current rules you will still be able to apply to withdraw your KiwiSaver savings for a First Home, as there are no income or price caps there. Recent changes now allow KiwiSaver members to withdraw all but $1000 from their account to buy their first home.

As published in the HB Today 7 September 2015

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06-8703838 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