KiwiSaver has homebuyers in a muddle

Understanding how to use the KiwiSaver first-home assistance scheme is proving so difficult that some prospective homeowners are giving up.

Administration of the scheme - which allows home buyers to withdraw most of their funds and apply for a deposit subsidy to help them into their first house - is split between Housing New Zealand and the individual KiwiSaver providers.

Commentators say the lack of one co-ordinating body has led to misinformation, resulting in some homebuyers missing out on the assistance.

The Banking Ombudsman's office has received a series of complaints from would-be buyers who have run foul of the rules. Ombudsman Deborah Battell has called for more clarity from KiwiSaver administrators.

Common misunderstandings include people not realising they cannot apply for the funds after settling on a house, that all the money must go directly to their solicitor on settlement day, and that the income and house price caps apply only to the deposit subsidy part of the scheme, not the funds withdrawal part.

There has even been confusion over the word "deposit". Housing New Zealand told the Banking Ombudsman's office that funds withdrawn from investors' KiwiSaver accounts could not be used for the house deposit, when it emerged what it meant was the money couldn't be used for the deposit given to the real estate agent.

To read the full NZ Herald article, click here

Posted: 20 Feb 2011

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