Government helping young buyers aspire beyond dusty do-ups to new houses as long as conditions are met.
If my husband and I purchase land using our KiwiSaver funds, can someone else build the house for us to live in or does the title of the house need to be in our names?

KiwiSaver stipulates that if we purchase land we must build a home up to code of compliance within 12 months.

However, we would be using all our available funds to purchase the land and wouldn't be in a position financially to build that fast.

But my father-in-law could pay for the house but then the title of the house may be in his name (unless our name can go on the title - not too sure how all that works).

Using KiwiSaver to get in the door of your first home doesn't mean being limited to a rumpty old do-up.

A first-home buyer can also be a first-home builder by using their KiwiSaver funds to buy land or a new home.

Nigel Jackson, Westpac's head of investment products, explains how this could work for you.

"First, you'll need to meet the eligibility requirements to make a first-home buyer's withdrawal - to have been a member of KiwiSaver for at least three years, not having made a first-home buyer's withdrawal before, intending the property to be your principal place of residence and never owning property before, [limited exceptions apply]," Jackson says.

Advertisement

"First-home buyer's withdrawals include your and your employer's contributions plus any investment earnings (and, provided the law is changed as expected, from April 1, 2015 your member tax credits).

"A first-home buyer's withdrawal may be used to buy land to build your first home on the property, however, the withdrawn funds must be put towards the land purchase only (not for other things such as building materials or contractors).

"Before your KiwiSaver provider releases your funds for a first-home buyer's withdrawal, they will need to see (amongst other conditions) a copy of the sale and purchase agreement that shows you are the purchaser (whether alone, as a joint tenant or a tenant in common).

"The requirement for a code of compliance certificate relates to the KiwiSaver HomeStart Grant.

"This is separate to the first-home buyer's withdrawal - it's a grant provided by the Government and administered by Housing New Zealand, subject to members meeting various conditions.

"The KiwiSaver HomeStart grant replaces the KiwiSaver First Home deposit subsidy from April 1, 2015 and will mean a grant for buying or building a new home could be up to $10,000 per individual (or $20,000 per couple).

"Income and regional house price caps apply," Jackson says.

As Jackson mentions, the Homestart grant, available to people on a modest income looking to buy a newly built home, is getting a bit of a facelift in April.

Advertisement

The KiwiSaver Homestart grant doubles the support the Government gives to those who want to buy a new home including:

A vacant residential section on which a new dwelling will be built.

A house and land package purchased off the plans.

A new apartment built off the plans.

A newly built property, defined as a dwelling of any type that has received its building code compliance certificate less than six months before the date of the buyer's application.

According to Housing New Zealand if you are buying land to build your first home you must provide a copy of the fixed price building contract that also clearly states the anticipated construction completion date when you complete your Homestart application.

"You must then provide a copy of the code compliance certificate on or before this date.

"If you are buying a property off the plans, you need to commence residing in the property from the settlement date.

"However, the agreement you submit with your application will need to stipulate a construction completion date, in order to be considered."

Anyone receiving this additional assistance from Housing New Zealand on top of withdrawing KiwiSaver funds from their provider has to live in the completed property for at least six months.

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.
Questions

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players email Helen Twose, helentwose@gmail.com. Sorry, but Helen cannot answer all questions, correspond directly with readers, or give financial advice.

More information on the Homestart grant is on the Housing New Zealand website (tinyurl.com/kiwisaverhome).