A real estate company is calling for the Government to allow KiwiSaver withdrawals for investment properties as a way to boost homeownership.
But financial adviser and author Martin Hawes says that's not KiwiSaver's job.
Current KiwiSaver rules allow members to withdraw most of their savings to buy a first home.
Century 21 owner Derryn Mayne, said that in the COVID-19 environment, the Government should think of new ways to encourage Kiwis to buy properties.
"If you've been in KiwiSaver for at least three years, you can withdraw funds for your first home, or for land to build your home. There are also circumstances in which people may access their funds if they've previously owned a home.
"There's no opportunity to use the voluntary savings scheme to buy a property you're not going to live in," Mayne said.
Loosening withdrawal rules could allow people to stay renting and buy an investment property in a cheaper area.
"[For example], 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 Waikato," Mayne said.
She said current rules which restrict withdrawals to owner-occupiers were relevant ten years' ago, when there were less KiwiSaver investors. Loosening rules to allow withdrawals for investment properties would allow more Kiwis to own a property.
"It would boost home ownership which has declined over the past 30 years from about 78 percent in the 1980s to about 55 percent now.
"A simple policy tweak would give a shot in the arm to New Zealand's property market and help the overall economy," Mayne added.
Martin Hawes said that KiwiSaver's job is to provide an income above NZ Super when people reach retirement. As KiwiSaver already allows withdrawals for first-homes, stretching the criteria to include investment properties erodes the scheme's purpose.
"I wouldn't want to open the gate and let a lot of other things through...KiwiSaver is for retirement savings and not for everything else," Hawes said.
Although buying cheaply in a different area is one way to get onto the property ladder, the costs of trading up are high.
"There's so much cost in repeatedly buying and selling: it's very expensive...real estate agent fees, lawyers fees, disruption, time," he explained.
Hawes said people should instead save and buy a property they can live in long-term.
"With lower immigration likely, house prices are likely to stay lower for longer."
Last October, acting retirement commissioner Peter Cordtz recommended the Government loosen rules around KiwiSaver first-home withdrawals, citing it would improve homeownership and reduce of tax-payer liability.
Current KiwiSaver first-home withdrawal rules require applicants to be KiwiSaver members for at least three years and to leave $1000 in their account. Members are required to live in the home for at least six months.
