But you’re already the trustee of a trust
The rules around the use of KiwiSaver have evolved over recent years as banks and other financial institutions have developed their understanding of the KiwiSaver regime.
KiwiSaver members may use their funds to help buy their first home; this is straightforward. What happens, however, if you want to buy your first home and you are already a trustee of a trust that owns property?
Initially, you could only access your KiwiSaver funds to buy your first home in your personal name; using a trust as a vehicle to purchase was not allowed. Now, however, the situation is more nuanced. An increasing number of lenders allow KiwiSaver members to make a withdrawal to finance the purchase of a first home, even where trusts are involved.
Let’s look at three scenarios to illustrate how this can work.
- You are a trustee of your friend’s trust, but not a beneficiary; as a trustee, your name is on the title to your friend’s home
- You are a trustee and a beneficiary of your parents’ trust; your name is on the title to their home, and
- You are a trustee and a beneficiary of a trust that has just been settled and so far only holds the initial $100 settlement; the trust does not hold property.
Trustee but not beneficiary
In scenario #1, the general rule is that if you are currently registered on the title to a property or land you will not qualify for a KiwiSaver first home withdrawal. The Financial Services Council of New Zealand, however, suggests that you will be eligible if you are registered as an owner of ‘an estate in land as a trustee who is not a beneficiary under the relevant trust’, because you haven’t previously held an estate in land (as you didn’t have a beneficial interest).
Your argument will be even stronger where the trust of which you are a trustee has sold the property and you can establish that you received no financial gain from the sale.
Trustee and beneficiary
In scenario #2 where you are a trustee and a beneficiary of a trust which already owns property, it is necessary to establish that you have ‘no reasonable expectation that you will be entitled to occupy the land as your principal place of residence before the death of the occupier or of their survivor.’
It may be difficult to establish that you have no reasonable expectation of being entitled to occupy the land as your principal place of residence if, for example, you are:
- 18 years old or over
- A trustee of the trust
- Named on the title to the trust property, and
- Occupying the home with your parents under a resolution that says ‘the settlors and their children aged under 20 years may occupy the property on the basis that they pay the rates, insurance and all outgoings usually payable from income.’
However, you could argue that once you turned 20 you would no longer have a reasonable expectation until after the death of your parents.
If there is no resolution in place, however, or a resolution that only authorises the settlors to occupy the home, then you may be able to argue that you have no reasonable expectation of being entitled to occupy the land as your principal place of residence (that is, you are there at the whim of your parents/the trustees and they can ask you to leave at any time).
Trustee and beneficiary of new trust
In scenario #3 where the trust has not purchased any property, some lenders, such as ASB, now allow the withdrawal of KiwiSaver funds to purchase your first home through a trust. The provisos are that the property being purchased is your first home, you are both a trustee and beneficiary of the trust, and you intend to live in the property as your principal place of residence.
To be eligible, your name (as the KiwiSaver member applying for a first home withdrawal) must be on the sale and purchase agreement or on a deed of nomination. This is good news for first home buyers who have good reason to want to hold assets in a trust, though care must be taken to ensure that your KiwiSaver provider will agree you are effectively in the same position as a first home buyer: one way to ensure that is to apply for approval prior to finding a property.
Being a trustee of a property-owning trust can create unwitting complications if you want to buy your first home using KiwiSaver funds. If you need some help in steering your way through the process, please feel free to get in touch.
 Financial Services Council of New Zealand.
 Clause 8(5), Schedule 1, KiwiSaver Act 2006.
Help to get your foot in the door
The purchase of your first home may be more in reach than you think. In 2018, the government aligned the purchase price limits of existing first home buyer schemes with the newly-launched KiwiBuild programme. As a first home buyer, or an eligible ‘second-chancer’, you could use these schemes to help you into your new home, sooner.
KiwiSaver First Home Withdrawal
If you have been a KiwiSaver member for three years or more, you may be able to withdraw your KiwiSaver funds (except $1,000) to contribute to your first home purchase. Each KiwiSaver scheme has different requirements for KiwiSaver First Home Withdrawal applications and you should contact your scheme provider directly to check your eligibility.
Getting help when you have difficulties with your insurer or financial services provider
The Insurance & Financial Services Ombudsman office (IFSO) was established in 1995 to help consumers who were in dispute with their insurers or financial services providers.
The IFSO is a free, independent entity to which you can lodge a complaint regarding the conduct and decisions of insurance and financial services providers, once you have exhausted that provider’s internal complaints procedures.
Enforceable undertaking accepted by WorkSafe after two students hurt in St Kentigern’s Sweeney Todd production
WorkSafe New Zealand has accepted an enforceable undertaking from the St Kentigern Trust Board following an incident in which two of their students were hurt during its production of Sweeney Todd in April last year.
WorkSafe’s investigation found that the board breached the Health and Safety at Work Act 2015 (HSWA) by failing to ensure, so far as was reasonably practicable, that the health and safety of students was not put at risk from work carried out as part of the business or undertaking.
Options for parents to help
It’s every Kiwi’s dream to own their own quarter-acre share of paradise. Unfortunately for many young people today, not only are the quarter-acre sections fast disappearing into multi-complex developments, but it’s also becoming harder than ever before with an ever-rising property market.
Every time you turn on the news, we hear something about the housing unaffordability in Auckland. Those south of the Bombay Hills start to get a bit glassy-eyed when listening to this on repeat. However, since the government’s introduction of the ‘LVR’ rules in October 2016 aimed at improving affordability in these markets, we must pay attention as all of New Zealand is affected.
The LVR explained
The loan-to-value ratio (LVR) is a measure of how much a lender will lend against a mortgaged property compared with the value of that property. Borrowers with LVRs of more than 80% (that’s less than 20% deposit) are often stretching their financial resources. As well, they are more vulnerable to an economic or financial shock, such as a recession or an increase in interest rates.
Grants available to insulate rental properties
Recent changes to the Residential Tenancies Act 1986 require all rental properties to have ceiling and underfloor insulation meeting a set standard, where reasonably practicable, by 1 July 2019.
A limited number of grants (for 50% of the cost) are available through Warm Up New Zealand: Healthy Homes, on a first-come-first-served basis for rental properties occupied by low-income tenants and are not owned by a government agency. The criteria are:
The government announced on 31 July changes to Housing New Zealand’s KiwiSaver HomeStart scheme to help more first home buyers into the property market. These changes are effective from 1 August. If you’re looking at buying your first home, it pays to check whether you’re eligible to withdraw your KiwiSaver funds using the KiwiSaver First Home Withdrawal and to see if you qualify for the HomeStart Grant. Depending on how long you’ve been in KiwiSaver, the money you receive will go a long way in helping you open the door to your first home.
KiwiSaver First Home Withdrawal
If you’ve been a member of a KiwiSaver fund for three years, you’ve never owned a home before and the property will be used as your principal place of residence, then you may be eligible to withdraw your KiwiSaver savings (except for the $1,000 government kick-start) through the KiwiSaver First Home Withdrawal scheme to put towards the purchase of the property.
The Court of Appeal has recently confirmed what happens to a Kiwisaver account when a person is made bankrupt. The short answer is the bankrupt gets to keep their money.
Since the introduction of the Kiwisaver legislation there has been confusion and uncertainty around what happens to a person’s Kiwisaver account once they are made bankrupt. This uncertainty is caused by two seemingly incompatible provisions contained within two different Acts. On one hand the Insolvency Act says that all the bankrupt’s property belongs to the Official Assignee (the government employee who manages bankruptcies), Kiwisaver funds are property so those funds would belong to the Official Assignee. However, on the other hand the Kiwisaver Act says that unless a law ‘specifically’ requires the withdrawal of Kiwisaver funds then it is not possible to withdraw the funds unless the person is suffering financial hardship.