Q: Can I make a first-home withdrawal from my KiwiSaver funds to buy land only? I may be building on it within 12 months. It's unclear if the "must be living in it by 12 months" rule applies.
A: Nigel Jackson, Westpac's head of investment products, says provided you are eligible, KiwiSaver funds can be used to buy land. There is no requirement to build a home on it within 12 months.
But you must leave at least $1000 in your account when you withdraw, and any amount in your KiwiSaver fund that is sourced from an Australian complying super fund cannot be withdrawn, because Australian rules apply to that money.
You can, however, use any investment earnings from those funds to buy your first home - or, in your case, land for a first home.
Any property must be intended to be your principal place of residence.
There are also other criteria, including:
• You must have been a member of a KiwiSaver scheme for three or more years
• You must have never made a withdrawal from a KiwiSaver scheme for a home purchase
• The house or land must be in New Zealand
• You mustn't have owned an estate in land (limited exceptions apply).
You may be thinking about the HomeStart grant.
"This is separate to the first-home purchase withdrawal and is administered by Housing New Zealand," says Jackson.
"Although there are no set timeframes for construction completion, it is a requirement that your HomeStart grant application states the anticipated construction start and completion dates.
"The HomeStart grant eligibility criteria is different to the KiwiSaver first-home purchase withdrawal," he says.
The grant, which can provide a boost of $3000-$20,000 depending on your circumstances, has different hurdles to the KiwiSaver withdrawal.
It is aimed at people on modest incomes aiming to buy or build modestly priced homes.
Last year the Government made it more attractive for people buying soon-to-be- or newly built homes by doubling the grant available to them.
The criteria to qualify include: income caps; having consistently saved minimum amounts into your KiwiSaver fund; and buying a home that comes within the regional house-price caps.
It was revealed this week that the leap in house prices mean the caps on income and house prices are under review. Housing Minister Nick Smith is expected to make an announcement this month.
If you think you could be eligible for the HomeStart grant, or the associated Welcome Home loans available to first-home buyers on modest incomes who have a 10 per cent deposit, keep an eye on the Housing New Zealand website for any changes.