Legal Small Talk: Accessing Kiwisaver to buy your first home

Kiwisaver funds are a key resource for many people buying their fist home. Photo / NZME

Many, if not most, New Zealanders now who are buying their first home access their Kiwisaver account to do so.

So what are the requirements, and how do you go about withdrawing your funds?

Firstly, you must have been a member of Kiwisaver for at least three years in order to make a withdrawal.

Secondly, you cannot make a withdrawal if you have owned property before.

For most people, that is an easy question to answer.

If you have previously owned property but consider yourself to be in the same position as a first home buyer, for example as a result of a relationship break-up, it is possible to make an application to Housing New Zealand for a declaration to that effect, so you can then apply to make a Kiwisaver withdrawal.

There are two options as to how you can use your Kiwisaver funds.

Firstly, you can use them to put towards the deposit under your Agreement for Sale and Purchase, with any balance to be used for settlement.

Alternatively, you can use the funds just for settlement. Either way, most providers require at least 10 working days to process an application and pay out funds to your lawyer (15 working days if you have lived overseas while being a member of Kiwisaver, as some portion of the Government contribution may be clawed back), so it pays to get organised as early as possible.

The application forms for most providers are now available off the internet, and need to be filled out and signed in the presence of your lawyer or someone else authorised to take a statutory declaration.

A common issue clients come up against is if they intend to use their Kiwisaver to pay the deposit on the property.

In that case, your lawyer will be required to give a binding undertaking to your Kiwisaver provider that the lawyer is in a position to recoup the deposit if the vendor defaults.

The lawyer may become liable to pay the Kiwisaver funds back if anything goes wrong.

Therefore it is essential to tell your lawyer as early as possible in the process, and certainly before you sign the Agreement for Sale and Purchase, if you are intending to use your Kiwisaver to pay the deposit, so that your lawyer can make arrangements for the deposit to be held safely until settlement.

• Richard Small is a senior solicitor at Jacobs Florentine. The information above is general only and cannot replace specialist advice. The writer accepts no responsibility or liability for reliance on, or use of, this article.