Fortune Manning Advise On Kiwisaver Updates

Fortune Manning advise that recent changes to KiwiSaver will mean that members of the KiwiSaver scheme looking to purchase their first home will be able to withdraw more of their KiwiSaver funds. For those who have been a member of KiwiSaver for three years or more, they can apply to their KiwiSaver provider to withdraw funds to assist them in their first home purchase.

As of 1 April 2015, withdrawals can include personal contributions, employer contributions as well as government contributions, such as member tax credits which have been earned. Previously, member tax credits could not be withdrawn. Note, however, that the $1,000 kick start from the government still cannot be withdrawn. The member tax credit is paid to the KiwiSaver account automatically each year around July or August as long as people personally contribute at least $1,042.86 towards their KiwiSaver account each year.

Fortune Manning explain some other things to remember about KiwiSaver and people’s first home purchase:

•  There are no house price caps or income limits for the KiwiSaver first home withdrawal. However, there are house price caps relating to the KiwiSaver HomeStart Grant – more on that shortly.

•  People will need to apply to their provider and meet the criteria for a first home (or a second-chance) withdrawal. If they have already applied for their KiwiSaver withdrawal before 1 April 2015 for a purchase that is due to settle, they may need to reapply to withdraw additional contributions that they are now eligible for.

•  People cannot use KiwiSaver funds for payment of a deposit, but the amount of their KiwiSaver can be taken into consideration during their finance discussions with the bank. The KiwiSaver funds will be paid to their solicitor's trust account on or prior to settlement.

The KiwiSaver HomeStart Grant, which has replaced the First Home Deposit Subsidy, is a grant available from Housing New Zealand to those who meet certain eligibility criteria. As long as they meet the conditions of the HomeStart Grant, they are not obliged to repay the funds. Note that there are income thresholds ($80,000 before tax for an individual, $120,000 before tax for a couple) and house price limits, which vary by region that will affect eligibility.

For those purchasing an existing home:

•   For each year of contribution to their KiwiSaver account, they can receive a HomeStart Grant of $1,000 - from a minimum of $3,000 to a maximum of $5,000 per person. This means that a couple purchasing an existing home can receive a HomeStart Grant of up to $10,000.

For those purchasing a newly built home:

•   For each year of contribution to their KiwiSaver account, they can receive a HomeStart Grant of $2,000 - from a minimum of $6,000 to a maximum of $10,000 per person. This means that a couple purchasing a newly built home can receive a HomeStart Grant of up to $20,000.

House price caps have been increased as of 1 April 2015 to reflect the rise in house prices across New Zealand. You will only be eligible for a HomeStart Grant if the house you are purchasing is within the maximum house price cap.

Region  Price Caps as of 1 April 2015 -

Auckland - $550,000,Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Nelson City, Tasman District, Waimakariri District, Christchurch City, Selwyn District, Queenstown Lakes District - $450,000, Rest of New Zealand - $350,000.

The Fortune Manning team recommend that people look through the KiwiSaver forms as early as possible to check that they will meet the eligibility criteria. They should also remember that specific time frames apply with respect to KiwiSaver applications - when submitting an offer on a property or negotiating an agreement prior to an auction, take care to allow enough time before settlement for processing of KiwiSaver withdrawal applications.

Talk to Fortune Manning when you find the right property and we can assist you in preparing an offer or negotiating changes to auction dates that will take your KiwiSaver requirements into account. Please go to http://www.fortunemanning.co.nz.