Government changing law to allow KiwiSaver withdrawals to buy farms, people on serviced tenancies to be exempt from living in their first home

The Government is making major changes to KiwiSaver allowing people, through a commercial entity they majority own, to make early withdrawals to buy their first farm and letting those in serviced tenancies buy their first home without having to live in it for at least six months.

Serviced tenancies are when an employer provides accommodation for someone to live in during their employment. Examples of this include health professionals, farm workers, clergy, military personnel and country police officers.

The joint announcement was made by Finance Minister Nicola Willis, and Commerce and Consumer Affairs Minister Scott Simpson on Sunday.

Currently people can make early withdrawals from their KiwiSaver to:

• buy their first home
• if they’re moving permanently overseas
• if they are experiencing significant financial hardship
• have a serious illness
• have a life-shortening congenital condition

Simpson says the KiwiSaver Act will be changed to allow first-time farm buyers to put their KiwiSaver funds “towards the purchase of a farm through a commercial entity they majority own, where it will be their principal place of residence”.

Simpson says this reflects the commercial reality of modern farm ownership.

“Most farms are purchased through companies or trusts. Until now, that has prevented aspiring farmers from accessing KiwiSaver in the same way as someone buying a house in town.”

He said these changes remove unnecessary barriers.

“These are targeted, practical changes that maintain KiwiSaver’s core purpose while making the scheme fairer for rural communities.”

Alongside this, Willis says the Government is making a technical change which will allow employees in serviced tenancies to use their KiwiSaver to buy their first home without having to live in it.

To access KiwiSaver for your first home, people have to live in the property for at least six months.

“Workers in service tenancies, such as farm workers, rural teachers, country cops, and defence personnel, have effectively been locked out of first home withdrawal because their jobs require them to live in employer-provided housing," Willis says.

“That’s not fair, so we’re making a technical change to the KiwiSaver Act to ensure workers in service tenancies aren’t denied the opportunity to put a foot on the property ladder.”

“The change will allow service tenancy workers to use their KiwiSaver for a first home purchase without having to live in it,” she says.

Legislation to make these changes happen will be introduced to Parliament in the middle of the year. A KiwiSaver Amendment Bill will likely go before a select committee before the election and would be enacted after it.

New withdrawals would likely be in place at least six months after it’s enacted.

The changes were sparked by a Member’s Bill Rangitīkei MP Suze Redmayne placed in the biscuit tin in November 2024.

The Member’s Bill, which will be withdrawn when the Government Bill is introduced, is called the KiwiSaver (First Home for Farm Land and Service Tenancy Tenants) Amendment Bill.

At the time, Redmayne said current legislation made it too hard for farmers, farm workers, military personnel and other employees who are given accommodation as part of their job, to get into the property market.

She said she wanted to support home ownership and even out the playing field by allowing a person to withdraw money from their KiwiSaver to buy their first farm; “by an entity they own, in the same way that they are able to withdraw money to buy a first home”.

“The current law states a farm must be purchased in their own name – but a farm is usually owned by an entity because it is both a business and a home,” Redmayne said.

And to access KiwiSaver for your first home, people have to live in the property for at least six months. Redmayne wanted people in serviced tenancies to be exempt from this.

“These are practical changes, designed with our community in mind,” she said at the time.

‘Tangible pathway towards ownership and investment in agriculture’

This announcement is one Federated Farmers, a lobby group for farmers and rural communities, has long waited for - and while it’s not exactly what they have been calling for (to allow farmers to use KiwiSaver for their first home, farm, herd or flock), it does tick some boxes.

They alleged National’s Todd McClay made a campaign promise in Morrinsville on the eve of the 2023 election that if elected, National would allow farmers to use KiwiSaver for their first home, farm, herd or flock.

And in May, then-Federated Farmers dairy chairman Richard McIntyre said; “a change in policy would give them a tangible pathway towards ownership and investment in agriculture - something the next generation of farmers desperately needs to see”.

A month later, Federated Farmers launched a petition calling for the Government to uphold their promise.

When asked about this by Newstalk ZB at the time, Willis brought up the Member’s Bill from Redmayne “to do just that” and that she had asked Inland Revenue to provide advice on this.

“I think if you can withdraw your KiwiSaver funds to buy a house, you should be able to withdraw them to buy a farm,” Willis said.

At the time, McClay, who is also Minister for Agriculture, told RNZ he was confident; “it will be done before the election”.

"We announced probably 25 pieces of policy and [Federated Farmers] had a list of 12 that we had already put out. Of those, 11 have been delivered on fully or are now underway with law changes.”

‘We need to stop using KiwiSaver as a political plaything’

But changing KiwiSaver like this has also had its critics.

In an article from June for its research hub, Simplicity chief economist Shamubeel Eaqub said this change is problematic as it could “weaken KiwiSaver’s core purpose as a retirement savings scheme and offers only marginal benefits to a small group of people, while impacting millions of members”.

Simplicity, a KiwiSaver fund manager, estimates 12,000 to 25,000 self-employed or employer farmers are KiwiSaver contributors.

And with the average KiwiSaver first home withdrawal sitting at about $25,000, this amount is only 0.6% of the average farm price ($3.9 million for a 286-hectare farm), “meaning it would offer only marginal help”, Eaqub said in the article.

“KiwiSaver’s primary goal is to provide long-term savings for retirement through regular contributions and compounding returns. This proposal risks weakening it from a retirement (and first home) fund to something else.”

“If farms are included, what prevents future proposals for other business investments (like a plumbing business or a home-based office)?” Eaqub asked.

“We need to stop using KiwiSaver as a political plaything. This is not some kind of government/public asset, it’s our money.”

At the time, Eaqub said the proposal for people to access KiwiSaver early for farms was a distraction from; “the pressing issue of an unsustainable pension system due to New Zealand’s rapidly ageing population”.

On calls for KiwiSaver settings to be changed, founder and managing director of Kōura Wealth Rupert Carlyon told RNZ in June that it would encourage more people to think of KiwiSaver as a piggy bank to solve New Zealanders’ financial problems.

He said it sent the wrong message to people, who should be using KiwiSaver for their retirement.