tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, July 11th, 12:05PM

News

rss
Latest Headlines

Don't use KiwiSaver for investment property - yet

The Interim Retirement Commissioner’s proposal to allow KiwiSaver first-home withdrawals to be used for investment properties came tantalisingly close but didn’t quite make it to the recommendation phase.

Tuesday, February 4th 2020, 9:00AM 1 Comment

by Miriam Bell

Back in October Peter Cordtz, the Interim Retirement Commissioner, proposed one way of addressing New Zealand’s declining rate of home ownership would be to loosen the KiwiSaver rules around first home withdrawals.

That’s because, currently, KiwiSavers who withdraw money for a deposit have to live in the property they buy - which can be problematic in areas with high house prices.

Cordtz suggested that if they could buy a property in a more affordable part of the country and that they didn't have to live in, they could use it as an investment to progress on the property ladder or simply to retire to one day.

But when Cordtz released the Commission for Financial Capability’s three-yearly Review of Retirement Income Policies last week that proposal had missed the cut.

Instead one of the recommendations was that the potential range of impacts if the owner-occupied requirement for first-home withdrawals from KiwiSaver was to be withdrawn should be modelled.

They had considered recommending removing the existing six-month residence requirement when using KiwiSaver to purchase your first home, Cordtz said in the review.

This was partly prompted by people asking why there is a six-month hold-up to them renting out their first house and partly because, anecdotally, they’d heard some are ignoring it anyway.

Cordtz said the proposal had received significant support particularly from young, urban New Zealanders who fear they won’t be able to buy a house to support their retirement in their city.

“On the other hand, we received quite a lot of opposition in fear of the impact this could have on a sensitive housing market across the country, and the impact on smaller communities and rural areas where affordability issues are already impacting.”

They had been convinced that this suggestion should be approached through a housing policy lens, rather than from a savings perspective, Cordtz said.

“Moreover, we think that the impacts likely to be caused by such a change should be extensively modelled before being confirmed. We will work with the Ministry of Housing and Urban Development to explore this option further.”

While many aspiring property owners greeted Cordtz’s original suggestion with enthusiasm, giving first home buyers more flexibility with KiwiSaver could further boost their competition with investors for housing.

KiwiSaver withdrawals to finance first homes have already been rising steadily: in the year to June 2019 nearly $1 billion was withdrawn by first home buyers, up from $870 million in 2018.

In a similar vein, the Reserve Bank’s most recent mortgage lending data shows first home buyers borrowed $1.20 billion in December 2019, up from $924 million in December 2018.

The 2019 Review of Retirement Income Policies can be read here

Read more:

Allow KiwiSaver withdrawals for investment properties

Tags: Commission for Financial Capability house prices housing market housing shortage investment KiwiSaver mortgages property investment retirement Retirement Commissioner

« Putting the RBNZ's new capital rules into perspectiveRising house prices glossed over in MPS »

Special Offers

Comments from our readers

On 26 June 2020 at 12:06 pm ameliaj said:
Hi there, I am wondering why it says "yet"
It is now June 2020.
Are we expecting to be able to use kiwisaver sometime soon for investment purchase?

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Harking back to the old days
    “Tactical move by CIGNA and looks like they have a lot of bench strength now in sales, underwriting and product / pricing...”
    18 hours ago by hitting rock
  • Greens want ACC extended to cover sickness
    “Never happen. The Greens are such an aspirational bunch. Must all the weed. They 'want' all sorts of unlikely things...”
    21 hours ago by All hat no cattle
  • Harking back to the old days
    “Really positive news. NZ has been blessed by many successful leaders and it is good that their skills can skill be utilised...”
    1 day ago by Francis L
  • Harking back to the old days
    “I dare say Cigna just got that extra grunt it's been looking for....”
    1 day ago by Matron
  • Greens want ACC extended to cover sickness
    “The Greens have no idea The purpose of the Woodhouse report was to remove the "at fault" component of accidents Sickness...”
    2 days ago by LNF
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 10 July 2020 9:02am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com