KiwiSaver rules deny home buyer
A Timaru first-home buyer has been denied funds from her own KiwiSaver account after mistakenly forfeiting access.
Rachel Farmer and her partner Justin Smith budgeted precisely to buy their new home. Included in the calculations was almost $3000 from her KiwiSaver account.
Miss Farmer was entitled to a first-home purchase withdrawal which amounted to her contribution and that of her employer, which is promoted by banks, finance providers, Housing NZ and KiwiSaver as one of the membership benefits of the scheme.
The house she and her partner chose in September was unoccupied, so the couple decided to settle two days after the purchase became unconditional. What neither of them realised was that Miss Farmer was not entitled to her money as they had not allowed at least 10 working days before the settlement date for KiwiSaver to process the request, a prerequisite for the application.
Rangitata MP Jo Goodhew said her office had dealt with one similar case in 2011 when a couple had purchased a property before applying for the funds.
Harcourts business manager Brent Williams said it was not unusual for banks and other lending institutions to require a week to 10 days for loan preparation. Property lawyers made real estate agents aware of timelines and, in turn, they were mindful of making clients aware when discussing a property, he said.
A Westpac spokeswoman said that the 10 working days before the settlement date rule was in line with industry standards.
Miss Farmer said what really upset her was that because there was not enough lead time she had forfeited the right to access that money until she retired or applied for it under special hardship circumstances.
A Westpac spokeswoman said via email , ". . . the rules to access KiwiSaver balances, including first-home withdrawals, are set by government legislation".
Within the legal framework each provider sets its own criteria on access.
When asked what she thought of such a policy, Mrs Goodhew said she could not comment on it.
Lawyer Alice Caird said she had sympathy for people such as Miss Farmer but in her experience it was not a common problem. She advised buyers to get pre-approval from their scheme providers.
- © Fairfax NZ News