Ownership of section disqualifies from KiwiSaver withdrawal
Q. We bought a 1.2 ha section in 2003 with the intention of putting a house on it. In 2004 we had a flood go through the property. The Council then told us we were not allowed to build on the property. We have tried to sell it many times but no one has wanted to buy it and our mortgage on it is a lot more than it’s now worth. We have been in KiwiSaver since the start but we have been told we can’t use our KiwiSaver to purchase a house as we already own property. To make matters worse in June we had our fourth flood go through the property. Any ideas?
A. You are indeed in a very difficult situation. As you have been dealing with this problem for many years now, I expect you have already explored most avenues to find a solution.
I asked the Property and Commercial legal team from Langley Twigg Law in Hawkes Bay to comment on your situation. They confirm that if KiwiSaver applicants are already listed as property owners on a Certificate of Title they are not eligible for the KiwiSaver first home benefits. A previous property owner can make application to Housing NZ for consideration in special circumstances but not a current owner.
If you were able to sell the property you could apply to access your KiwiSaver under Housing New Zealand’s Second Chance option, as previous owners of property, and also apply for the HomeStart grant. Readers should go to the Housing New Zealand website for the eligibility criteria.
You bought the section before KiwiSaver started so you did not know at that time that there would be an opportunity for First Home buyers to use KiwiSaver to help them into their First Home. The Government is keen to encourage home ownership. Home ownership in New Zealand has been declining since the 1950’s and the Government would like to reverse this trend. Home ownership creates more stable communities and better outcomes for children. It also encourages a sense of community and participation in community activities.
While the KiwiSaver rules for buying a property don’t make it easy for everyone, it is an option that is not readily available in other countries. In Australia for instance there is no facility for a First Home purchase using Australian Super.
In your shoes I would approach the bank that holds the mortgage and ask them for advice. They are the other party besides you with a vested interest in this property, and they should be able to help in some way. Other places to go for free help are Citizens’ Advice Bureau and your local Budget Advisory Service. I am sure all my readers will join me in wishing you well and hoping for a good outcome.
As published in the HB Today 14 September 2015
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06-8703838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz.