$90,000 in KiwiSaver but 'renting for life'

A Dunedin woman says she is stuck renting for life, and in a much worse position for retirement, because of the rigidity of KiwiSaver withdrawal rules.

The woman, whom RNZ has agreed to identify only as Lisa, owned a property with her former partner. She did not use KiwiSaver to purchase it.

When the relationship ended, the house was sold. She used the money she received from the sale to buy a caravan and live in a campground while she recovered.

"I am now at a point where I have some savings to be able to consider buying again. In the meantime I am now in a rental paying $400 a week. However, with limited earning capacity due to a mental injury supported by ACC I need to remain realistic regarding what I can afford to pay on a mortgage and being able to sustain it in the future."

She said she had no intention of living with another partner again, so needed to be able to buy alone.

But the rules as they currently stand mean she is struggling to do so.

People who have owned a house previously but not used their KiwiSaver can access their money if they are deemed by Kainga Ora to be in the same position as a first-home buyer. That requires them to have assets of no more than 20 percent of the value of set price caps in each area.

For Lisa in Dunedin, that means she cannot have more than $80,000.

She has savings of $160,000.

To buy a house with a mortgage that she can manage, she says, she needs to put down a deposit of 40 percent or 50 percent, which she could do if she could access her $90,000 in KiwiSaver.

But she has too much in her savings to do so.

"I understand that KiwiSaver is for retirement … but this would mean financial security for retirement - I could have a mortgage paid off and own a home by then, rather than still be renting."

She said she was facing rent increases year-on-year and the potential that she would be priced out of the property market permanently if prices rose again.

She said the $80,000 limit for a deposit might be fair for a double-income household when two people were servicing the mortgage but it was hard on a single person.

"I'm renting $400 a week. I could afford a mortgage at a similar amount at this stage. I'm cautious to go any higher than that because I don't know what the future holds in terms of my income … I've got another 25 years until retirement … it would set me up well for retirement. I would potentially be mortgage free, I would own my own place and my living costs would be reasonable whereas at this stage at some point I'm not going to be able to afford to rent anymore either and I don't know where that leaves me and that has massive implications for me in terms of my mental health. The situation just feels so impossible and it seems like such a logical solution to have some ability to look at circumstances particularly when someone is buying a property as a single person."

She said she knew she was not the only one in the same position.

"I didn't choose to step out of the property … circumstances took over. And I just wish there was a slightly more human approach to it that sort of understood that some people are in situations not of their own doing or choosing."

A spokesperson for the Ministry of Cities, Environment, Regions and Transport (MCERT) said the criteria for a withdrawal for people who had owned a home previously were set out in KiwiSaver regulations.

"The realisable asset test caps for KiwiSaver second chancer withdrawals were based off the last house price caps that were in place for the First Home Grant, which was disestablished in 2024.

"These asset test caps were last set on May 15, 2023. The caps enable Kāinga Ora to assess if a previous homeowner's financial position is similar to a first-home buyer and determine if they are eligible to withdraw from their KiwiSaver as a second-chancer."

Jeremy Andrews, a mortgage adviser with Key Mortgages, said he dealt with a few people each year who were wondering whether they could use KiwiSaver to buy another property.

"If a home was sold and the KiwiSaver wasn't withdrawn for the purchase of that property, there's a good chance clients can still use it toward their purchase of their new home."

He said the regional asset caps varied from about $80,000 to $120,000 in Whangārei and $175,000 in Auckland, Queenstown or Thames.

"Maximum net realisable assets includes cash savings, term deposits, shares, a second or non-daily-driver vehicle, caravan, boat, or other major assets over $5000."

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