Buying first home 'is now easier'

Phil Heatley says tweaks made to KiwiSaver rules will make it easier for first-home buyers. Photo / Mark Mitchell

A change to the KiwiSaver rules will make saving for a first home considerably easier, says Minister of Housing Phil Heatley.

From April 1, the amount employees will have to save to qualify for the KiwiSaver first home subsidy will drop from 4 per cent to 2 per cent of their pay. For non-employees - including the self employed, beneficiaries and others out of the workforce - the same principle will apply. Mr Heatley said more detail would be announced before April 1.

The subsidy ranges from $3000 to $5000. For a couple, it's $6000 to $10,000.

The change is in line with the reduction of the minimum KiwiSaver employee contribution from 4 per cent to 2 per cent of pay from April 1. But the Government only decided yesterday to drop the contribution requirement for the first home subsidy.

Other requirements for the subsidy - which goes towards a deposit on a first home - are:

You have to save for three years to qualify for a $3000 subsidy. The amount rises to $4000 after four years and $5000 after five years or more.

Your household income has to be less than $100,000 a year for one or two people buying a home, or less than $140,000 for more than two people.

The house you buy has to be within the lowest-priced 25 per cent of houses in your region.

Whether or not you qualify for the subsidy, if you have been in KiwiSaver for three years or more you can withdraw all your savings, employer contributions, and all the interest and other returns in your account to put towards your first home.

You don't have to contribute at any particular level to make the withdrawal, and there are no income or house price caps on it. The Government's $1000 kick-start and tax credits will remain in your KiwiSaver account.

It's also possible to get the subsidy and make the withdrawal if you have previously owned a home but no longer do. This applies if you are in much the same financial circumstances as a first home buyer. For example, you might have lost money through a relationship break-up or a business failure. Details on who will qualify are expected to be announced later this year.

How much will you have to contribute from April 1?

Annual income $10,000: Less than $4 a week

Annual income $30,000: Less than $12 a week

Annual income $50,000: Less than $20 a week

Annual income $70,000: Less than $27 a week

Annual income $90,000: Less than $35 a week