You’ve probably heard of KiwiBuild, and if you’re looking to purchase a new home, this could be a great option for you. But how do you know if you’re eligible for this initiative? We’ve put some of the criteria below for you in a bit more depth.
KiwiBuild is an initiative for New Zealanders who don’t currently own their own home – the goal is to help facilitate new housing developments for Kiwis.
How do you know if you’re eligible?
To be eligible for a KiwiBuild home, you must:
- Be at least 18 years old
- Be a New Zealand Citizen, Permanent Resident or Resident Visa holder who is ‘ordinarily resident in New Zealand’
- Not currently own a home in New Zealand or overseas
- Have a pre-tax income from the previous 12 months of
- $120,000 or less for a single buyer; or
- $180,000 or less combined for two (or more) buyers.
- You will also need to commit to living in your KiwiBuild home for a minimum period of time:
- at least one year for a studio or one-bedroom home; or
- at least three years for a home with two-bedrooms or larger
See below for the full KiwiBuild Eligibility Criteria.
New Zealand citizenship or residency
To be eligible to buy a KiwiBuild home you must be a New Zealand citizen, a permanent
resident, or a resident visa holder who is “ordinarily resident in New Zealand”. If you are
applying with a spouse, civil union partner or de facto partner, only one of you will need to
meet these requirements.
Ordinarily Resident in New Zealand
If you are a resident visa holder, you are considered to be “ordinarily resident in New
Zealand” if you:
- have been living in New Zealand for at least the past 12 months; and
- have been in New Zealand for at least 183 days in total in the past 12 months; and
- are a tax resident in New Zealand, meaning that you meet the criteria above and you have a long-term connection to New Zealand (e.g. you have work or family ties to the country).
Other visa types are not eligible, even if you normally reside in New Zealand.
The total income before tax (i.e. gross income) means the combined income of everyone
named on the Application who will share ownership of the home. It does not include the income of any children, flatmates or boarders who will live with you in the KiwiBuild home after you purchase it.
Income includes money such as wages, salary, overtime pay, pensions, rental income or investments.
What do I need to provide?
If you are on a salary, benefit or pension, you will need to provide proof of your income from the IRD for the past 12 months immediately prior to the date of application in order to determine your eligibility.
What if I don’t earn any income?
You’ll still need to provide proof of no income from the IRD.
Irregular and secondary sources of income are not considered part of your earnings and will not count towards the income cap. These might be:
- secondary benefits, such as Accommodation Supplements
- tax credits, such as Working for Families
- certain types of investment income, such as KiwiSaver investments
- non-taxable income, such as allowances and scholarships.
What if I’m self-employed?
If you are self-employed, you must provide your earnings documents for the last complete
tax year. Acceptable documents include:
- an IRD Individual Income Tax Return for the most recent complete tax year or if
- an IR3 Individual Tax Return prepared by an accountant (if your Individual Income
Tax Return is unavailable on your myIR account).
If you have not been self-employed for a full tax year, you will need to provide an IRD Summary of Earnings for the most recent tax year.
If you are self-employed, your income will be assessed on the most recent IRD tax year.
Ownership and Occupancy
In order to be eligible to buy a KiwiBuild home, you must intend to own and live in the home as your principal place of residence for the Minimum Ownership Period, calculated from the
settlement date of your purchase.
What is the Minimum Ownership Period?
If the property is a studio or one-bedroom dwelling, the Minimum Ownership Period is one year.
If the property is a dwelling of two or more bedrooms, the Minimum Ownership Period is three years.
Can I have flatmates?
You may have other people live with you, either for free, as paid guests or flatmates, but you cannot completely rent out the property while you live somewhere else, the house needs to be your main place of residence.
You will need to sign a statutory declaration to confirm that you agree to these requirements.
What if I need to move or sell my house before the end of the Minimum Ownership Period?
There may be situations where you will need to move, rent or sell your house before the end of the required time period. This might include a sudden change in your financial situation
(such as losing your job), the need to move for a job, or an unexpected change in family circumstances.
In these situations, you must seek prior approval from KiwiBuild to rent or sell the KiwiBuild home before the required time period is complete.
If you sell or rent the KiwiBuild home within the required time period without KiwiBuild’s prior consent, you will be under an obligation to pay the Crown. Before purchasing the KiwiBuild
home, you will need to sign a deed enforceable by the Crown which states that you undertake to pay the Crown 30% of:
- any capital gain if you sell your KiwiBuild home within the required time period without KiwiBuild’s prior consent and/or;
- any gross rental income if you rent out your KiwiBuild home without also living in it as your primary residence.
KiwiBuild will take measures to ensure that you comply with your obligations.
How can I apply for a KiwiBuild home?
If you would like to purchase a KiwiBuild home, you must complete a KiwiBuild Pre-Qualification Application to confirm your eligibility.
If you’re unsure whether KiwiBuild is the right option for you, get in touch with our expert mortgage team who can give you expert advice at no cost to you!