Helen Twose

Helen Twose on KiwiSaver and you

Helen Twose: KiwiSaver home subsidy rules can be tricky

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KiwiSaver contributors planning to use savings to buy a home need to be clear about criteria for withdrawal.

Being able to access funds for a home depends on income. Photo / Brett Phibbs
Being able to access funds for a home depends on income. Photo / Brett Phibbs

My husband and I are trying to get on to the property ladder for a second time.
When we joined KiwiSaver we were led to believe we could withdraw our funds along with our employer contributions after three years to help with the deposit for a home.
Unfortunately we have just had the fine print pointed out to us that there is an income cap on this entitlement and unfortunately we are just over the income threshold. We would not have joined KiwiSaver if we had known this.
I feel we would have been better off saving the money in a bank account.
Our three years is nearly up and we do not have a deposit saved for a home.
We have some debt to pay off and have been concentrating on that while we thought our deposit was growing in KiwiSaver.
Your advice would be appreciated.

As stated on the Housing New Zealand website www.hnzc.co.nz/kiwisaver, all previous homeowners who no longer have an interest in real estate and who wish to withdraw their KiwiSaver contributions to buy a home, must apply to Housing New Zealand so they can be assessed to determine if they are in the same financial position as a first-time home buyer, in terms of assets and income.

These cases are assessed to confirm the level of realisable assets and income the named purchasers have.

Unfortunately, if the combined income of the named parties/purchasers exceeds $100,000 for one or two buyers or $140,000 for three or more buyers, they are deemed not to be in the same position as a first-time home buyer.

Similarly, if they have realisable assets totalling more than 20 per cent of the house price cap for the region they are purchasing in, they will be assessed as not being in the same financial position as a first-home buyer and therefore will not be able to withdraw their KiwiSaver funds.

These criteria were developed by the Cabinet/Government and are used only for those who previously owned property.

If you are a first-time home buyer, you just need to apply directly to your KiwiSaver provider, where there are no income or assets criteria to meet.

To read more about the eligibility criteria to withdraw your KiwiSaver contributions as a previous home owner, go to www.hnzc.co.nz/kiwisaver

•Housing New Zealand spokesman.

I'm 27 years old and have bought a small flat which is my first home, as I wanted to have my own place and get on to the property ladder.
Before I applied for a loan I really wanted to use my KiwiSaver to help with my house deposit. I rang KiwiSaver and was told I need to be a KiwiSaver member for at least three years. I am in my second year as a member and have approximately $9000 in my KiwiSaver.
Now, I would want to buy a house as there are too many things to consider when living in a flat, like the neighbours and pets.
Is there any chance that I can cash in my KiwiSaver next year when I decide to sell my flat?
I wouldn't qualify as a first-home buyer.
Will I fall under the second chance criteria perhaps?

Previous home owners who currently do not have an interest in real estate can apply for both the deposit subsidy and savings withdrawal as a previous home owner.

In such cases, they would need to make one application to Housing New Zealand for: a) The KiwiSaver deposit subsidy b) The KiwiSaver withdrawal determination for a previous home owner. To be eligible for the subsidy, they need to meet the standard eligibility criteria for the deposit subsidy, as shown in www.hnzc.co.nz/kiwisaver as well as meeting an additional realisable assets test.

To be a "qualifying person" to withdraw their KiwiSaver contributions as a previous home owner, they need to meet the same realisable assets test, as well as the income cap criteria that is used for the deposit subsidy eligibility.

If they are deemed to be eligible, a letter will be produced that they need to take to their KiwiSaver provider to help their application for the savings withdrawal.

Note that the withdrawal process is administered by the KiwiSaver providers, not Housing New Zealand, whose role is purely to determine whether the previous home owner is in the same financial position as a first-time home buyer in terms of realisable assets and income.

•Housing New Zealand spokesman.

A mix-up in last week's column saw an answer from Housing New Zealand run with the wrong question.
Here is the correct question and answer:

I have been a KiwiSaver member for more than four years now.
I recently bought a house - my first home - with a settlement date in three weeks' time.
As the vendor wants to settle the sale early the price was negotiated to give us a good deal. My lawyer has advised me that I cannot have the Housing New Zealand First Home Subsidy in time for the settlement date and hence would be in risk of voiding the agreement.
My question is can we get the subsidy application processed in a fast track mode or can we get the subsidy later if possible?

A client who wants to have their application considered outside of the stipulated four-week period should email kiwisaver.firsthome@hnzc.co.nz as soon as they can and Housing New Zealand can discuss the process/outcome directly with the client. The deposit subsidy was developed to help first time home buyers who could secure a commercial mortgage, but who had an insufficient deposit.

The subsidy is paid to help with the overall deposit required to settle the purchase on settlement day and is therefore not paid out after settlement is completed.

For this reason it is important to submit an application within the advertised timeframes, so enough time is given to ensure the funds are paid to the client's solicitor on the morning of settlement.

Applications for the subsidy are handled by Housing New Zealand and the eligibility criteria includes income and house price caps.

Full details are on the Housing New Zealand website here.

•Housing New Zealand spokesman.

•Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail.com

- NZ Herald

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