KiwiSaver: Moving out could come at a cost

If you get a HomeStart grant, you must live in your new home for at least six months. Photo / Getty Images

The wording around KiwiSaver first-home withdrawals for the "intention to live in the residence" for six months from signing seems a bit ambiguous. If I buy a house but am shifted to another area of the country for work but have every intention of living in the KiwiSaver-bought house some years down the track does, this still count as intention?

Although it is a retirement-savings scheme at heart, one of the benefits of KiwiSaver is being able to get your money out early to buy a first home.

The rules are clear that your KiwiSaver money can't be used to buy a rental property or holiday home - it has to be a house you plan to live in.

When you fill out the first-home withdrawal forms you will have to make a statutory declaration in front of a Justice of the Peace, lawyer or similar that, among other things, the house you are buying will be your "main residence".

According to the Auckland Justice of the Peace Association a statutory declaration is "a statement of facts, usually made in writing before someone authorised to take a statutory declaration".

It's a legal document and false declarations could lead to a criminal conviction.

If you buy a first home with help from Housing New Zealand's HomeStart grant there are clear rules on the need to live in the house for at least six months.

Bruce Kerr, executive director at Workplace Saving New Zealand clarified the six-month ownership rule: "If you live in the house you have bought for a minimum of six months from settlement date or if you use the HomeStart grant to buy land to build a house on, and live in that house for a minimum of six months from the issue of the code-compliance certificate for that house, the HomeStart grant does not need to be paid back."

You need to sign a declaration that you will live in the house for a minimum of six months.

"If you move out earlier, you may have to pay back the grant, with interest.

"However, for a first-home buyer who does not access a HomeStart grant but makes a KiwiSaver withdrawal in support of that purchase, the KiwiSaver Act 2006 is silent," Kerr says.

So if you are making a standard KiwiSaver first-home withdrawal from your provider, without the additional top-up from the Housing NZ HomeStart grant, there is no minimum period you need to live in your home beyond the purchase date.

This makes it easier for those people who find that their circumstances change after buying a new home.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players, email Helen Twose. Sorry, but Helen cannot answer all questions, correspond directly with readers, or give financial advice.