A young couple who were told they would qualify for an $8000 government grant to help buy their first home are in shock after finding out they can only get half that.
Feargus Norton, 23, has been in KiwiSaver since his parents opened an account for him when he was 15 - much longer than the minimum of three years required for a KiwiSaver HomeStart grant, and more than the five years required to get the maximum grant of $5000.
His partner Stephanie Matheson, 22, opened her account three years ago this January and thought she would get $3000.
But their expectations have been shattered by a footnote in the rules that not even their lawyers, mortgage lender or KiwiSaver providers knew about.
"First we went to ASB, which was lending us the money and was Steph's KiwiSaver provider," Norton said.
"They checked her KiwiSaver and originally gave us a pre-approval for up to $400,000 based on our income and our deposit, assuming we got $8000 between us from HomeStart."
Next they consulted Norton's parents' lawyer, and then a personal lawyer, who agreed they should get $8000.
In November they found a bargain: a 20-year-old three-bedroom townhouse next to a noisy motorway offramp in Onehunga that was selling for $370,000. Norton's parents gave $55,000 towards the deposit, and mortgaged their own home to buy the property in December, planning to on-sell to the young couple when Matheson qualified for HomeStart in January.
Then the nightmare began.
"The first time we knew we mightn't get it was when they replied to Steph saying she wouldn't get anything," Norton said.
She has worked part-time in a shop for most of her three years in KiwiSaver while studying speech-language therapy. But she didn't work for seven months of that time and Housing NZ, which runs HomeStart, said she would have to work for another seven months to clock up three years of "regular" KiwiSaver payments.
"I got a very teary call from Steph saying she'd had a call and they'd said no," Norton said.
Then Housing NZ told him that he could only get $3000, and then only if he paid a top-up of $230.10, because he had only paid into KiwiSaver in three years and in one year he paid less than the required 3 per cent of his income. He works part-time as a contractor in his father's software business while studying computer science.
But his parents realised that the records he downloaded from Inland Revenue's KiwiSaver website were incomplete.
"Luckily, Mum is a good record-keeper and she had records back to 2008 on paper," Norton said. They went back to their bank and proved that they had made an early payment that Inland Revenue's records had somehow lost. Housing NZ then upped his grant to $4000.
Chapman Tripp lawyer Mike Woodbury, a KiwiSaver expert, said the rules requiring "regular" contributions of at least 3 per cent of income, or 3 per cent of the adult minimum wage for non-earners, were set purely by policy and not by law. The only place they are stated online is in footnote 12 of the HomeStart application form.
"I'm sure there could be higher-profile website disclosure," he said.
Norton's father, Idiom Software founder Mark Norton, said the HomeStart eligibility calculator on the Housing NZ website omitted the requirements around regular contributions completely. His firm specialises in entitlement calculators and he offered to design one for HomeStart for free.