Federated Farmers Celebrates KiwiSaver Rule Change for Young Farmers Buying First Home or Farm

The announcement was made yesterday by Finance Minister Nicola Willis and Commerce and Consumer Affairs Minister Scott Simpson.

“However, 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," she adds.

Meanwhile, Simpson says the changes to the Act will ensure first-time farm buyers can use their KiwiSaver balances to purchase a farm through a commercial entity they majority own, where it will be their principal place of residence.

The current rules allow the purchase of a farm under a KiwiSaver member's name so long as they intend to live on it. However, in practice many farms are purchased through a company or trust.

"This reflects the commercial reality of modern farm ownership," Simpson says.

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“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.”

“The reforms deliver on the Government’s commitment to back rural New Zealand and remove unnecessary barriers.

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

Federated Farmers dairy chair Karl Dean says the changes are a huge step forward for the next generation of farmers.

"We’re immensely proud to have led the charge on this issue, advocating for a change to the KiwiSaver rules for three long years," Dean says.

"Until now, you could only use your KiwiSaver to purchase a house you’ll live in," he says.

"That’s unfair because farm staff, along with the likes of rural teachers and rural police, haven’t been able to get on the property ladder, all because they live remotely and in employer-provided accommodation.

"They’ve been denied the same opportunity as their urban counterparts.

"This change means young rural workers can finally access their savings to secure financial security and begin building equity, even if they keep living in accommodation provided by their employer.

"It’s a massive result and I know there’ll be many young farmers out there celebrating right now."

Dean says the impact of the changes cannot be overstated, highlighting the challenges young farmers face in buying a farm.

"So many young farmers have worked hard to save a decent deposit but just aren’t able to get the bank’s backing to invest in their first farm," he says.

"Letting those farmers use their KiwiSaver will be an enormous help in pulling together a larger deposit.

Federated Farmers dairy chair Karl Dean

"It will put them in a stronger financial position with their initial equity, but they’ll also have less debt - which means they’d be paying less interest too.

"All of that gives our next generation of farmers a better chance of building wealth and putting themselves in a good position come retirement."

Getting the KiwiSaver rules amended has been a key priority for Federated Farmers, forming part of its 12-point policy agenda for the incoming Government back in 2023.

The National Party committed to making the change, announcing so on the eve of the 2023 election.

One young farmer celebrating the news is Waikato sharemilker Danielle Hovmand, who has challenged the Government several times to deliver on its 2023 campaign commitment.

"Talking with young farmers across the country, their most-asked question is: ‘When are we going to be able to use our KiwiSaver to better ourselves now, rather than having to wait until we retire - just because we’re farmers’," Hovmand says.

"I’m very pleased to hear the Government are finally changing the rules to make that possible.

"Many young people’s goal is to buy their first home and get on the property ladder, so it’s refreshing to see farmers will be able achieve this too."

Danielle Hovmand.

Hovmand says this will open doors for young farmers to use their hard-earned savings towards something that can have a huge impact on their financial position.

"Hopefully, in years to come we’ll see the flow-on effects of more young people being able to purchase their own herds and then achieving farm ownership earlier.

"I think this will have a huge impact on farmers across the country and will continue to help strengthen the agriculture industry for many years to come."

Legislation giving effect to the changes will be introduced to Parliament in the middle of the year.