John Key gives an example in his speech of how it might work:
Let’s imagine a couple are both earning $40,000 a year – they might, for example, be living here in South Auckland.
They’ve been in KiwiSaver for five years, and are looking to buy a first home that’s under the price limit.
Under our changes, they could together withdraw up to $29,000 from their KiwiSaver accounts, and get either a $10,000 or $20,000 HomeStart Grant, depending on whether they’re buying an existing or a new home.
In total, that means a deposit after five years of almost $40,000 – or almost $50,000 if they are buying new.
That would be enough on its own to get a Welcome Home Loan for a house costing up to $400,000 or up to $500,000 if new – depending, of course, on their ability to service the mortgage.
Our changes will give a lot more people the confidence that if they join KiwiSaver, and keep saving, they can put together a deposit on their first house.
It’s important to note that most of that deposit will be their own savings.
We want to help people into their first home, but they have to help themselves first.
I much prefer that to the Government borrowing $3 billion more per year to try and become NZ’s biggest property company!
All these changes I’m announcing today will take effect from 1 April next year, if we are re-elected.
Not too long after that, the first people to benefit from these changes will be unlocking the front door of their own home for the first time.
The new policy will cost $218 million over the next five years.
That’s a fairly modest cost compared of around $35 million per year compared to borrowing $3 billion a year.
The details of the changes are:
The package comprises three changes:
Replacing the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home and increasing the house price limits;
Enabling larger KiwiSaver First Home Withdrawals by including the member’s tax credit (meaning first home buyers will now be able to withdraw all of their KiwiSaver savings except the $1000 kick-start);
Expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.
“We are roughly doubling the number of people receiving a Government grant to buy a first home from 10,000 per year to 20,000 per year, and doubling the Government grant they are eligible for if buying a newly-built home,” Dr Smith says.“The house price limits for KiwiSaver HomeStart and Welcome Home Loans will be $550,000 in Auckland, $450,000 in Wellington, Christchurch and other similarly-priced housing markets, and $350,000 for the rest of the country.”
Currently, first home buyers are eligible for a grant of $3000 after three years in KiwiSaver, $4000 after four years and $5000 after five years. Under KiwiSaver HomeStart, this grant will double to $6000 after three years, $8000 after four years and $10,000 after five years for the purchase of a newly-built home.
The changes to the KiwiSaver First Home Withdrawal in enabling access to the member’s tax credit will increase the maximum withdrawal amount by $512 per year for each year a member has contributed.
The KiwiSaver First Home Withdrawal is limited to members buying a first home, who have been contributing for a minimum of three years. The KiwiSaver HomeStart Grant and Welcome Home Loans have additional criteria of people having an income below $80,000 for an individual and $120,000 for a couple, and the house being purchased must be below the regional house price limits.
I wasn’t at the campaign launch, but I underatand there were 2,000 to 2,500 people there making it the biggest political gathering in a few decades I’d say – and it was a National Party meeting in South Auckland!
UPDATE: I hear the final count was 2,700!