Election 2023: National wants young Kiwis to have option of using KiwiSaver funds to pay rental bond

National will allow New Zealanders aged under 30 to dig into their KiwiSaver funds to pay their rental bonds if elected to power in October.

The party's housing spokesperson Chris Bishop called the idea - initially proposed by National's youth wing - a "common sense change" that will make it easier for young people to pay their bonds and free up cash.

But he acknowledges Kiwis who choose to take the money from their KiwiSaver for rental bonds will miss out on any interest it would have accumulated in the account otherwise.

"That's true," he said. "But we think for many young people, and it's not mandatory, it's an option for people, but for many young people… they would rather have that money they have saved up, that they can't have access to until they are 65, they would rather have that money over in the Tenancy Services, paying for that bond."

A rental bond, which can be up to four weeks' worth of rent, is held by Tenancy Services in case the tenants don't pay rent, damage the property or need to settle a claim relating to their tenancy. It's paid back to the tenant if there are no issues at the end of the tenancy.

However, with rent prices increasing - Trade Me data shows they jumped 6 percent in the year to May - so are bonds.

"Getting together up to four weeks rent in advance for a tenancy agreement is not easy for many people, particularly for students and young graduates, who don’t have a lot of cash," said Bishop.

"Our policy will mean that people who have some money saved in KiwiSaver accounts will be able to use that money to pay the bond for a rental agreement.

"The money will be transferred from their KiwiSaver account to Tenancy Services and returned to the KiwiSaver account when the tenancy ends. As is currently the case, tenants will also be able to transfer their bond to a new tenancy."

Work and Income currently offer a bond grant of up to four weeks' rent if someone meets certain eligibility criteria. They don't have to be receiving a benefit to receive the grant and it has to be paid back.

Bishop said the National Party option will only be available to those aged under 30 and will only be available for five years' worth of bond payments.

"This reflects the fact that we want young people joining KiwiSaver early and staying in for the long haul," said Bishop.

"The next National Government will amend the KiwiSaver Act to implement this change and will put in place any operational changes required between Tenancy Services (run by MBIE) and KiwiSaver providers to make the back-end operation as easy as possible."