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Can KiwiSaver help to buy a farm?
 
Q.           My wife and I have been saving to buy a farm. We have never owned our own home as accommodation has been provided with all the jobs I have had. I have heard about the changes to the KiwiSaver HomeStart grant, and we are wondering if this would help us to buy a farm? We have both been in KiwiSaver since 2008.
A.         The Government recognises that it can be very difficult to save enough to buy that first home, and both the KiwiSaver withdrawal and the HomeStart grant are aimed at helping people get onto the property ladder. 

The KiwiSaver withdrawal is relatively straightforward and available to anyone buying their first home who has been in the Scheme for at least 3 years. You need to apply directly to your fund manager on the form that they provide, with accompanying information including as a copy of the Agreement for Sale and Purchase of Real Estate for the purchased property in your name. You need to declare that the property you are purchasing is intended to be your principal place of residence. You can’t buy such a property to rent out, while you continue with your current housing arrangement. 

Buying a farm may be more complicated than buying an urban property. Before entering into an agreement for sale and purchase I would recommend talking to your KiwiSaver fund manager and your lawyer. 

If successful, funds will be released to your lawyer’s trust account in time for settlement. You need to allow enough time, as funds cannot be paid out after the settlement date. Since 1 April this year you can apply to withdraw all your KiwiSaver savings except for the $1000 ‘kickstart’.

The HomeStart grant is managed by Housing New Zealand and has much stricter criteria. Applicants need to be over 18 and have contributed a minimum specified amount to KiwiSaver for 3-5 years. Your combined income should be less than $80,000 for an individual or $120,000 for a couple.  Successful applicants can get up to $5000 each towards an existing property or $10,000 if they plan to build. Your stumbling block will be the price cap for properties – this is just $350,000 for a property in Hawkes Bay. Unless you are happy starting with a house on a small block of land, you are unlikely to be able to benefit from this. 

A quick online search did turn up a few rural properties under $400,000, on blocks of land up to 6 hectares. This may be the best option for people like you looking to get onto the rural property ladder. Anyone buying a property with a HomeStart grant must live in the property for at least 6 months. If they do not do so they may have to repay any grant money received, with interest. 

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 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