Guidance for completing an application for First Home Grant

For further details on the First Home Grant and the first-home withdrawal, see the brochure "Buying your first-home with KiwiSaver", available from Kāinga Ora - Homes and Communities.
Visit www.kaingaora.govt.nz/firsthomegrant or call 0508 935 266.

Note 1.  First Home Grant

This replaced the KiwiSaver first-home deposit subsidy from 1 April 2015.

The First Home Grant is a payment of at least $1,000 for each year that you have contributed the minimum percentage of your total annual income towards your KiwiSaver scheme, complying fund or exempt employer scheme for at least three years, up to a maximum of $5,000 after you have contributed for five or more years. This level of grant would go towards the purchase of an existing/older property. However, for the purchase of a brand new home, the grant could be doubled to $6,000; $8,000 or $10,000 depending on how long the member has contributed towards their eligible savings scheme.

The First Home Grant is administered by Kāinga Ora - Homes and Communities on behalf of the Government and all applications should be sent to Kāinga Ora - Homes and Communities directly. If you are currently not in the process of buying a home, you can apply for a pre-approval to see if you are likely to be eligible. This should help you once you actively start looking for a home to buy. Pre-approvals are valid for 180 days and should you not have bought a house within this time, you will need to make a new application on the expiry of the pre-approval.

All First Home Grant applications are to be sent to Kāinga Ora - Homes and Communities at least four weeks/20 working days prior to any settlement date. We will normally process applications within 10 working days, provided all the relevant and correct supporting documents have been provided with the application. Those applicants who are also applying for the grant approval to meet finance conditions in their agreement for sale and purchase, should do so at least 10 working days prior to the date required. Those applications not submitted within the stipulated timeframes may not be considered for assessment or approval.

Note 2.  Previous home owners in New Zealand or overseas

Previous home owners in New Zealand or overseas may apply for the First Home Grant. If you are a previous home owner wanting the First Home Grant, you need to meet the standard eligibility criteria as well as the following:

• You have not received the First Home Grant, Home Start Grant or KiwiSaver deposit subsidy and/or first-home withdrawal before
• You do not have realisable assets totalling more than 20 percent of the house price cap for existing/older properties in the area you are buying in. See note 3  for price caps. Realisable assets are belongings that you can sell to help pay for your house. For example if you were buying a house in the $400,000 cap area, your realisable assets cannot be worth more than $80,000. Kāinga Ora - Homes and Communities considers the following to be realisable assets:
  • Money in bank accounts (including fixed and term deposits)
  • Shares, stocks and bonds
  • Investments in banks or financial institutions
  • Building society shares
  • Boat or caravan (if the value is over $5,000)
  • Other vehicles (such as classic motorbikes or cars – not being used as your usual method of transport)
  • Other individual assets valued over $5,000
  • Money already paid to real estate agent or solicitor or developer.

Note 3.  Maximum house price areas:

The house is within the maximum house price caps. All regions are based on the Territorial Local Authority boundaries. The house price caps are:

• If purchasing a share in a property the equivalent total property purchase price (sum of all shares) will be assessed against the maximum purchase price caps outlined above, not the individual share being purchased.
• Applicants can only purchase a share in a property proportionate to the number of intended property owners.

Note 4.  Income cap criteria

• Have earned an income of $95,000 (before tax) or less in the last 12 months, for a single buyer
• Have earned a combined income of $150,000 (before tax) or less in the last 12 months, for two or more buyers

See "Instructions on how to obtain supporting documents required for assessment" on the previous page to provide evidence of the income earned in the last 12 months.

Note 5.  Deposit requirement:

To be eligible for the First Home Grant, buyers must have a cash deposit that is equal to or in excess of 5% of the property purchase price. This can be made up from your KiwiSaver first-home withdrawal, your First Home Grant approval/ pre-approval amount, money in the bank or already paid to a real estate agent or solicitor and an amount gifted by a close family member*, as verified by a gifting declaration which can be downloaded from www.kaingaora.govt.nz/firsthomegrant. Please note that deposits provided through personal loans or guaranteed through other securities such as equity gifts, credits on settlement and family guarantors are not permitted.
* Close family member means:
a. a parent, adult sibling or adult child, or
b. an aunt, uncle, nephew or niece, or
c. a grandparent, or
d. a person who has lived with, and been part of, the applicant’s family for many years, but is not an estranged or divorced spouse or partner.

Note 6.  Types of property and land eligible for the First Home Grant

There are five types of property and land ownership arrangements the First Home Grant can be used to buy. These are:

Note 7.  Differing property purchases

The First Home Grant can be applied for when buying one of the following options:

• An existing/older property
• Vacant land, on which you will build your home
• A property off the plans
• A newly completed/built property that was issued with a code compliance certificate less than six months before the application is received
• An existing/older/relocatable house or a new house to be built on Māori land where the client has a right to occupy.

The First Home Grant places a greater emphasis on clients purchasing brand new properties by providing a larger grant for such properties. Such properties could be eligible for the larger First Home Grant of $2,000 per year of contribution, resulting in a grant of between $6,000 and $10,000 being awarded. Properties that could be eligible for the larger grants are properties being purchased off the plans, buying vacant residential sections that are ready to build on with a view of building a first home and properties where the code compliance certificate has been issued within 12 months of the application being received. Alternatively, the standard grant amount of between $3,000 and $5,000 will still be available to those buying existing/older properties.

When buying a property off the plans (house and land or apartment), the property must be completed and a code compliance certificate issued within the stipulated timeframes stated in the agreement entered into. Therefore, it is essential that any such agreement has an anticipated date for when the construction is expected to be completed by. You will need to ensure that your solicitor tells us when settlement occurs.

When buying vacant land, which is ready to build on and where you plan to build your first home, please note that if eligible, the First Home Grant must be used towards the purchase of the land and cannot be paid towards the costs of building the property after you have purchased the land. Therefore, you need to provide us with a signed copy of the sale and purchase agreement for the land purchase, as well as a signed copy of the fixed price building contract that clearly shows the total build costs at least four weeks prior to the settlement date for the land purchase. If you submit this application and supporting documents after settlement on the land has concluded, you will not be eligible to receive the First Home Grant to assist with the building costs.

The combined costs of the land purchase and the fixed price build contract must meet the regional house price cap in order to be eligible for the First Home Grant.

The property must be completed and a code compliance certificate issued within the timeframes stated in the build contract. Therefore, it is essential that any building contract has an anticipated date for when the construction is expected to be completed by. Your solicitor will need to advise us immediately when the code compliance certificate has been issued.

Please note, quotes are not acceptable for this purpose. You should also provide evidence that you have sufficient funding to complete the construction of the building. It is important to note that the First Home Grant cannot be paid to assist with the construction costs, if you already have an interest in land.

In all cases, the property you buy must be used as your primary place of residence for at least six months from the date of settlement, or in the case of land for building a house on from the date that the code compliance certificate is issued.

Note 8.  Agreements for sale and purchase etc

Please note that all conditional/unconditional sale and purchase agreements must only be in the names of the intended buyer(s) and that we do not accept those agreements where the "and/or nominee" option is exercised without our approval. Additionally, properties being bought in the name of a trust will not be accepted. The KiwiSaver member must be one of those named buyers of the property. You must provide a full copy of the sale and purchase agreement, that has been signed by both the vendor(s) and the purchaser(s). For those who are buying properties off the plans, please provide a signed copy of the agreement/contract that states:

• That any payment (like the deposit or progress payment) you make that is made up of the First Home Grant is held in trust, in escrow, by an independent stakeholder or similar arrangements for the payment to the vendor upon settlement
• Sunset provisions allowing you to terminate the contract (with the return of at least that part of any amount made up of the First Home Grant held in trust, in escrow, by an independent stakeholder or similar arrangement) should settlement not be able to be achieved on or before the projected date for completion specified in the contract
• That settlement cannot occur before the issue of a title for the property and a code compliance certificate for the building work on that property.

Before signing any contract, you should talk to your solicitor to make sure that these requirements (and any others that your solicitor may advise you about) are satisfied.

Note 9.  Code compliance certificate

A code compliance certificate is a certificate under the Building Act that shows that building work has been completed in accordance with an application for a building consent – you have built what you have said you would build.

Note 10.  "Schemes"

We recommend that before you apply for a First Home Grant or a first-home withdrawal, you re-familiarise yourself with KiwiSaver. It would be helpful to check what type of scheme you belong to, who your scheme provider is, how long you have been contributing to a scheme and how much you have been contributing. You can talk to your employer, check any statements you may have received from your provider, or talk to KiwiSaver direct on 0800 549 472.

KIWISAVER SCHEME

Retirement savings scheme providing members with annual member tax credits from Government. Members choose to pay 3 percent, 4 percent or 8 percent of salary or wages and the employer is required to pay 3 percent. The scheme name will include the word KiwiSaver.

COMPLYING FUND

A registered employer sponsored superannuation scheme which allows members to choose to lock in a percent of their salary into an account which may be accessed on the same terms as for a KiwiSaver Scheme. Members should contact their fund providers to find out if first-home withdrawal is permitted. The member may also continue to contribute to an unlocked account.

EXEMPT EMPLOYER SCHEME

An employer sponsored superannuation scheme which does not require a member to lock in any member contributions as required by KiwiSaver Schemes but does provide members with access to the First Home Grant. New employees will be offered this scheme instead of KiwiSaver when they join the employer. They do not get the Government annual members tax credits.

Note 11.  Regular minimum contributions:

To be eligible for the First Home Grant you must have contributed at least the minimum percentage of your total income to a KiwiSaver scheme, complying fund or exempt employer scheme for a period of at least three years. (From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent of your income, 4 percent of minimum wage for non-earners or 4 percent of your yearly benefit for beneficiaries. From 1 April 2009, the minimum contribution was reduced to 2 percent of your income, 2 percent of minimum wage for non-earners or 2 percent of your yearly benefit for beneficiaries. 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).

The contribution periods may change. For example you may have been a paid employee for a period and then self employed for a period. This is acceptable as long as you were contributing the minimum contribution during both those periods, and they both add up to at least three years. This three year period can be longer than a calendar period, but must add up to three years.

Members are required to contribute regularly in each of the years that they are making payments, however contributions do not need to be consecutive in order to qualify for the First Home Grant. For those earning no income, contributions for those periods will need to be made of at least the minimum percentage (currently 3%) of the minimum adult wage, based on a 40 hour week. If no voluntary contributions are made during periods of non income, then that period will not count towards eligibility for the First Home Grant.

It is important to note that in order to qualify for the First Home Grant, contributions must be made to the KiwiSaver member’s scheme from all sources of income, not just their main source of income.

You must include a statement that shows all of the contributions that you have made to KiwiSaver. Employed workers should supply a print out statement from "My KiwiSaver" from www.kiwisaver.govt.nz (See Instructions on the previous web page). Self-employed applicants and those who make voluntary KiwiSaver contributions should contact their KiwiSaver providers to obtain a contribution statement.

EVIDENCE OF A REGULAR SAVINGS HABIT

KiwiSaver members who do not contribute regularly because they are not earning are eligible for the First Home Grant if they meet the following minimum regular contribution requirements:

NON-EARNERS

If you are a non-earner you must contribute at least the minimum percentage of the minimum wage to a KiwiSaver scheme, complying fund or exempt employer scheme for a period of at least three years. (From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent of the minimum wage. From 1 April 2009, the minimum contribution was reduced to 2 percent of the minimum wage. From 1 April 2013 the minimum contribution was increased to 3 percent of the minimum wage).

BENEFICIARIES

If you are a beneficiary, you must contribute at least the minimum percent of your yearly benefit (before tax). (From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent of your yearly benefit. From 1 April 2009, the minimum contribution was reduced to 2 percent of your yearly benefit. From 1 April 2013 the minimum contribution was increased to 3 percent of your yearly benefit).

Note 12.  Savings suspension

KiwiSaver members, who have contributed to their scheme for 12 months or more, can take a "savings suspension". This is a break in contributions that can last between three months and five years. Inland Revenue can approve savings suspensions of less than three months in special circumstances. You can take as many savings suspensions as you like. Payments can still be made during a savings suspension.

Note that savings suspensions will extend the time to qualify for a First Home Grant by the length of the break(s) in payments. For example, if a KiwiSaver member takes a 12 month savings suspension then the qualification period for the First Home Grant will extend by 12 months.

If your circumstances change and you no longer make automatic deductions from salary/wages it is your responsibility to ensure that you contact your scheme provider to discuss how you can make voluntary contributions to your savings scheme. Please note, that should you not do so, it may impact on your eligibility for the First Home Grant.

Note 13.  Payment of First Home Grant

When buying an older/existing property, land on which you are to build a home or a newly completed/ built home, the First Home Grant will be paid to your solicitor on the morning of the property/land settlement. These funds will then be paid to the vendor as part of the overall funds required to buy the property. The grant cannot be paid out after settlement has occurred, so please ensure that your application is submitted for consideration at least four weeks prior to settlement.

If you are buying a property off the plans, the grant can be paid out to support the first payment that you make under that specific agreement, for example the deposit payable to secure the property or any progress payments. Along with your completed application, you will need to provide a signed copy of the agreement/contract and show clearly when the deposit or progress payments are payable. Any such payments before settlement will need to be held in trust, in escrow, by an independent stakeholder or similar arrangement for payment to the vendor upon settlement.

If you are buying a property off the plans, but started this process some time ago and where you have already paid a deposit to secure the specific property, the grant will either be paid out to your solicitor on the morning of settlement after the code compliance certificate has been issued or it can be paid towards a specific progress payment stated in the agreement/contract. Your solicitor will need to confirm settlement date 10 working days from receiving the code compliance certificate and certificate of title.

Note 14.  Processing timeframes

Pre-approval/approval applications will normally be assessed within 10 working days of Kāinga Ora - Homes and Communities receiving them (provided they are complete). The payment of the First Home Grant will take up to four weeks (20 working days) from Kāinga Ora - Homes and Communities receiving the application and has to be made on settlement date unless you are purchasing vacant land to be built on or a property off the plans, where the First Home Grant can be paid to assist you with the first payment required under the agreement you have entered into. Applications that are not submitted four weeks before settlement may not be approved.

Note 15.  My KiwiSaver

For proof of contributions, we require print out statements from "My KiwiSaver." This is an online tool on the  www.kiwisaver.govt.nz website that allows you to view your balances and transactions for your KiwiSaver account. You can register for free and access your information anytime. For details on how to produce these statements, see the instructions on the previous web page. If you are self employed you will need to speak to your KiwiSaver provider. (See instructions on the previous web page).