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The government’s change to KiwiSaver to allow it to be used to help purchase a first home or farm is a much-needed stepping stone on the way to farm ownership, farmers say.
The technical change to the KiwiSaver Act means farm staff in service tenancies (living on the farm) will soon be able to use KiwiSaver to purchase a house without immediately moving in.
Morrinsville sharemilker Danielle Hovmand said she was very pleased with the announcement, after challenging the government several times to deliver on the commitment it made in 2023.
“It levels up the playing field for all New Zealanders and it’s great to see that it’s also included that it can be used for a land or farm purchase.”
Other farmers she had spoken to had echoed her sentiments, she said.
The change will allow farmers to move forward financially and at a later stage put their equity back into the ag sector in a possible farm purchase.
It gives young farmers further options in getting on the farm ownership ladder, she said.
“It’s a real challenge for young people to get into farm ownership and this improves that access to a bit of extra capital.”
Hovmand said she is also pushing for it to include herd purchasing, but the announcement is a great start.
“At the moment, we’re seeing high cow prices, which is quite limiting for young people to get into herd ownership.”
Mid Canterbury dairy farm manager Jack Taggart said the law change will be a step in the right direction.
“I’m looking at buying a house at the moment and finding that to be a challenge. There’s a significant amount of money sitting in my KiwiSaver and in a few years’ time when I want to go sharemilking or into an equity partnership, that money will be very helpful.”
A farmer under 30 with KiwiSaver is likely to have around $50,000-$60,000 in their KiwiSaver. While that is not enough to purchase a majority share in a farm it is a great option as a first small step, he said.
Hypothetically, Taggart said, he could use it to buy a home and then in the near future either sell that home or borrow against it to purchase a herd.
“Either way, having that access to KiwiSaver definitely gets me on the way to make that happen.”
He also supported the argument of extending the criteria to include herds – but recognised it would be a slippery slope because, in order to be fair, it should include farm machinery for arable farmers or tradeable stock for red meat farmers.
“But being able to own a herd of cows using your KiwiSaver is far more achievable than owning a part of the farm and the returns on owning a herd of cows are typically much greater than owning a farm.”
He was also pleased the law change was inclusive and aimed at assisting other professions that live rurally, such as doctors and police officers.
Legislation giving effect to the changes will be introduced in Parliament in the middle of the year.