FIRST HOME BUYERS: KIWISAVER WITHDRAWALS

by Mark Joblin

For many first home buyers the withdrawal of KiwiSaver funds is relied on to fund the payment of the deposit or the balance of the purchase price of a property. As such, applying for a KiwiSaver First Home Buyer Withdrawal is an important step in purchasing a first home. Being familiar with the rules and requirements around KiwiSaver First Home Withdrawals is essential for prospective first home buyers as it can reduce the added costs and stress which often arise on the purchase of your first home.

ELIGIBILITY REQUIREMENTS

To be eligible for a KiwiSaver First Home Buyer Withdrawal, the rules under the KiwiSaver Act 2006 require the following:-

  1. That the Buyer has been a KiwiSaver member (or complying superannuation member) for at least three years;
  2. That the land the Buyer is purchasing is, or is intended to be their principal place of residence; and
  3. That the Buyer has never owned any land and is purchasing their first home, or is a previous home owner in the same financial position as a first home buyer.

MAKING AN APPLICATION

When completing an application to withdraw KiwiSaver funds for a first home it is important to start the process early. Most KiwiSaver providers recommend you allow for anywhere between 10 to 15 working days from when they receive the completed application before it is processed. Given the strict deadlines that can arise when purchasing a property, buyers should contact their KiwiSaver provider and complete their withdrawal applications as soon as they can as KiwiSaver funds must be withdrawn and used to complete settlement. You are not able to withdraw your KiwiSaver funds after settlement has been completed.

Copy of Sale and Purchase Agreement

As part of any First Home Withdrawal application, buyers need to provide their provider with a copy of the signed Agreement for Sale and Purchase with their name as the buyer as evidence that they are the buying of the property.

Statutory Declaration

Buyers must also complete a Statutory Declaration section and your solicitor must provide a Solicitor’s Certificate. Pursuant to the Statutory Declaration a buyer makes a number of declarations including that the information they have provided is true and correct, that they consent to their personal information being used for processing their application,  and that they meet the eligibility requirements for a First Home Withdrawal. The Statutory Declaration must be witnessed by a person permitted under law to witness statutory declarations such as a Justice of the Peace or a lawyer.

Solicitor’s/Practitioner’s Undertaking 

The final section of the First Home Withdrawal application to be completed is the Solicitor’s or Conveyancing Practitioner’s letter of undertaking. This must be completed and signed by a solicitor or conveyancing practitioner. In doing so they are undertaking that the funds will be applied solely to the purchase price on settlement, or towards the deposit with any remaining balance then applied on settlement (depending on whether the agreement is subject to conditions at the time of the application). If settlement is not completed, the funds are required to be repaid to the provider and deposited back into the KiwiSaver account.

PREVIOUS HOME OWNERS

If you have previously owned a home, you may still be eligible to use your KiwiSaver funds pursuant to the previous home owner withdrawal scheme. This requires you to apply to Kāinga Ora and have them provide you with a letter deeming that you are in the same financial position as a first home buyer. The letter is then included in your withdrawal application. The application forms will also contain a section where you select whether you are a first home buyer or a previous home buyer.

FREQUENTLY ASKED QUESTIONS 

Can I use my KiwiSaver funds if I am purchasing my first home as a trustee?

A common approach taken by people when buying a home is to purchase the property in their capacity a trustee of a trust. The question which then arises for first home buyers contemplating withdrawing their KiwiSaver funds is whether purchasing a property in the name of a Trust would affect their eligibility for a KiwiSaver First Home Buyer Withdrawal.

As previously mentioned, when completing an application, all KiwiSaver providers require a copy of the Agreement for Sale and Purchase showing the KiwiSaver member as the buyer of the property. Whether or not this means a person has to be named on the Agreement as the buyer personally or in their capacity as a trustee will depend on the KiwiSaver provider. Some providers do allow KiwiSaver members to use their funds where they are named on the Agreement as purchasing in their capacity as a trustee provided they are also a beneficiary of the trust and will be living in the property. However many providers take a stricter approach and only allow a withdrawal of KiwiSaver funds where the applicant is purchasing the property personally. Therefore, someone looking to purchase their first property in the name of a trust, should first discuss with their KiwiSaver provider whether this would affect their eligibility for a first home withdrawal.

Can I transfer ownership of my home to a trust after I have bought it using my KiwiSaver funds?

Under the KiwiSaver legislation there is no minimum time period that a person must own a house purchased with KiwiSaver funds. This means a first home buyer can effectively transfer the ownership of their new home to a trust at a time that suits them. There may however be other consequences arising from the transfer of the property to a trust and you should always seek legal advice before taking this step.

Can I use my Australian Superannuation funds that I have transferred to my New Zealand KiwiSaver provider?

Under schedule 1 of the KiwiSaver Act, s 8(4)(b), funds from an Australian Superannuation scheme are excluded from a First Home Withdrawal.

CONCLUSION

As the housing market continues to heat up, KiwiSaver First Home Withdrawals will be increasingly relied upon by many first home buyers as a means of funding their purchase and owning their first home. It is therefore important that first home buyers have an understanding of the rules and processes for withdrawal of their KiwiSaver funds so as to ensure they are able to access these funds.

We recommend you talk to one of our experienced team early on in the process to ensure you are able to meet the requirements and time frames.

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