Kiwisaver Homestart Grant can help you buy your first home

From 1 April 2015 the KiwiSaver first-home deposit subsidy has been replaced by the KiwiSaver HomeStart grant.

How does the HomeStart grant work?

• After three years of regularly contributing to KiwiSaver (of at least the minimum allowable percentage of your total income) you may be entitled to the HomeStart grant.
• You can apply for the HomeStart grant or pre-approval if you have belonged and contributed to a KiwiSaver scheme, complying fund or exempt employer scheme for at least three years.
• If you are purchasing an existing/older home, the HomeStart grant is $1,000 for each year of contribution to the scheme:
  • 3 years of contributing = $3,000 (the minimum you can get)
  • 4 years of contributing = $4,000
  • 5 years of contributing = $5,000 (the maximum you can get).
• If you are purchasing a new home, a property bought off the plans or land to build a new home on, the HomeStart grant is $2,000 for each year of contribution to the scheme:
  • 3 years of contributing = $6,000 (the minimum you can get)
  • 4 years of contributing = $8,000
  • 5 years of contributing = $10,000 (the maximum you can get).
• If you are purchasing land to build a new home on, there is a maximum amount the combined land and new home can cost. There are other eligibility criteria to meet.
• A home which received its building code compliance certificate less than six months before Housing New Zealand receives a HomeStart application is considered a new home. The certificate must relate to the home as a whole and not only some building work on the home. Buying a vacant residential section and planning to relocate an existing/older house on the site does not constitute a new build property and will only be eligible for a HomeStart grant of between $3,000 – $5,000.
• In cases of properties being bought off the plans, the HomeStart grant may be paid out prior to settlement to assist you with the initial payment or progress payment required as stated in the agreement you have entered into. In these cases, the grant must be held in trust, in escrow or similar arrangement, with payment to the developer only on settlement. Before signing any contract or agreement, you should always seek legal advice. If you are considering buying a property off the plans, it is highly recommended that you discuss this with your solicitor before signing the agreement. You will also need to ensure that there is a projected completion date stipulated on the contract and that the developer is aware that the HomeStart grant is to be held in trust or in escrow until settlement date.
• Please note that Housing New Zealand requires at least 4 weeks/20 working days from receiving an application through to paying out the HomeStart grant. Also, please ensure that, if you are applying for the grant in order to meet the financial conditions of your agreement for sale and purchase, you do so at least 10 working days prior to the unconditional date.If you are looking for your first home but haven’t yet found the right house, you can apply for pre-approval of your HomeStart application.
• If you live in the house you have bought for a minimum of six months from settlement date or if you use the HomeStart grant to purchase land to build a house on, and live in that house for a minimum of six months from the issue of the code compliance certificate for that house, then the HomeStart grant does not need to be paid back. If you move out before the relevant six month period ends, you may be required to pay the HomeStart grant back, with interest.
• You can also buy a property with other people, who may or may not be KiwiSaver members. If they are members, you may all qualify for HomeStart grants. However, 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.
• You can only receive the HomeStart grant or its predecessor, the KiwiSaver deposit subsidy, once.

We have developed an online calculator to help you estimate the HomeStart grant you could be entitled to. Visit http://www.kiwisaver-homestart.co.nz/calculator/and answer a few simple questions.

Check that you are eligible for the HomeStart grant:

• I am 18 years or over.
• I currently do not own a home or land.
• I have not received the HomeStart grant or previous KiwiSaver deposit subsidy before.
• I am a member of a KiwiSaver scheme, complying fund or exempt employer scheme (contact your scheme provider to check your scheme is eligible).
• I have contributed at least the minimum allowable percentage of my total income to a KiwiSaver scheme, complying fund or exempt employer scheme for at least three years. (From 1 April 2013 the minimum contribution was increased to 3 percent of your income, 3 percent of the minimum wage for non-earners or 3 percent of your yearly benefit for beneficiaries. From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent, and from 1 April 2009 to 31 March 2013 it was reduced to 2 percent.)
• I am the sole buyer and I have earned $80,000 or less (before tax) in the last 12 months.
• We are two or more buyers who have earned a combined income of $120,000 or less (before tax) in the last 12 months.
• I have a deposit that is 10 percent or more of the purchase price. (The 10 percent deposit includes the money you can withdraw through the KiwiSaver first-home withdrawal feature, the HomeStart grant amount you or the other purchasers may be eligible for and any other funds, such as savings, fixed and term deposits or funds already paid to a real estate agent or solicitor. The deposit can also be gifted by a relative with a gifting declaration.) Note that the deposit cannot be borrowed or secured against other property, in order to qualify.
• I am buying one of the following types of property and land arrangements:
  • fee simple
  • stratum estate (freehold and leasehold)
  • cross-lease (freehold and leasehold)
  • leasehold
  • multiple-owned Maori land.

The house price cap in Wellington city is now up to $450,000
Read more

Source: Housing NZ

UPDATE: LATE JULY
A recent email to real estate industry professionals has highlighted some things you can do to make sure your application for the Home Grant is not delayed.
Read below:

More than 1,600 people have been successful in securing a KiwiSaver HomeStart grant to purchase their first home, since the new scheme was introduced on 1 April. At Housing New Zealand, we receive around 500 applications a week and we are focused on processing them as quickly as possible. However, we’ve found that some of the applications we receive aren’t fully completed or don’t have the correct documentation attached to them. This can cause further delays for your client, which causes unwanted stress or makes hitting the processing timeframes much harder.

To avoid these delays, here are some points to check before submitting an application:
    

• Ensure that the income certificates are for the last 12 months, not the last financial year
   
• Ensure that income certificates are provided for all named/intended purchasers
   
• Provide a detailed KiwiSaver contribution statement that covers the period your client has contributed to KiwiSaver
   
• Provide evidence of a deposit of at least 10% of the purchase price, if there is already a signed agreement for sale and purchase
   
• Ensure the correct application has been completed

Remember that we require a minimum of four weeks/20 working days from receiving an application through to paying out the KiwiSaver HomeStart grant (Affects potential settlement dates so check to make sure you have allowed enough time in your sale and purchase agreement).

Also, please ensure that if your client applies for the grant to meet the financial conditions of your agreement for sale and purchases, you allow at least 10 working days prior to the unconditional date.

If you would like updated information on your client’s application, please email us atkiwisaver.enquiries@hnzc.co.nz.
It would also help if you could use the following email addresses for the differing types of correspondence:       

• Emailing applications and supporting documents – kiwisaver.homestart@hnzc.co.nz 
   
• Returning signed legal documents – kiwisaver.documents@hnzc.co.nz 
   
• General enquiries and enquiries about applications already submitted –kiwisaver.enquiries@hnzc.co.nz 

For more information see www.kiwisaver-homestart.co.nz.

Yours sincerely,

Matthew Smith 
Senior Manager Financial Operation 
Housing New Zealand

Check out an example of four properties I am marketing in Johnsonville that could fit the criteria for you here