The Government needs to broaden KiwiSaver's withdrawal criteria to allow more New Zealanders to access the scheme to buy an investment property, says one real estate boss.
KiwiSaver has more than three million members with average balances of around $20,000, with many accounts experiencing volatility in value since the Covid-19 health and economic crises. Inland Revenue figures revealed today also show in April and May more Kiwis tapped into their retirement savings by making hardship withdrawals.
Last year the Retirement Commissioner suggested that KiwiSaver members should be allowed to withdraw money from their accounts to buy rental properties, not just first homes. Owner of Century 21 New Zealand, Derryn Mayne, now believes the concept needs to be urgently revisited by the Government.
"Given these unprecedented times and the growing opportunities out there, the rules now need to be broadened.
"You can withdraw funds for your first home, or for land to build your home, if you've been in KiwiSaver for at least three years. There are also circumstances in which people may access their funds if they've previously owned a home. However, there remains absolutely no opportunity to use the voluntary savings scheme to buy a property you're not going to live in," she says.
Ms Mayne says the strict owner-occupier criteria was fine during the Global Financial Crisis over a decade ago, as there were far less people in the scheme and the average balances were less than $3,000, given KiwiSaver was launched in 2007.
"The Government needs to think of new ways to encourage property purchases. We are not short of buyers for now, but as a country we need to think laterally if we're to keep our housing market ticking along."
The Century 21 New Zealand real estate boss says it's wrong people can only access KiwiSaver as an owner-occupier property purchaser, when the reality is a lot of people simply can't afford to buy where they want to live.
"If you live in Auckland and can't afford to purchase there, you should be able to stay renting but use your KiwiSaver to buy an investment property in say Waikato. That's increasingly appealing given the lower deposit requirements, rock-bottom interest rates, and a buyers' market."
As KiwiSaver funds cannot be used for an investment property, those using the scheme must live in the home for at least six months.
Ms Mayne says any fear of investment properties, using KiwiSaver, being quickly flipped could be easily rectified. A rule could ensure people accessing their funds have to hold onto to their investment property for certain amount of time.
She says enabling Kiwis to use the scheme to help buy an investment property is a safe bet for them and positive for the country. It would boast home ownership which has declined over the past 30 years from about 78% in the 1980s to about 55% now
"Residential property will always deliver a strong capital gain over the long-term. What's more, such a simple policy tweak would give a shot in the arm to New Zealand's property market and help the overall economy," says Derryn Mayne.
Contact: Derryn Mayne – Century 21 New Zealand - (021) 399-431