First home withdrawal available for homes on Māori land

Schedule 1 of the KiwiSaver Act 2006, clauses 8(3B), 8(6) and 8(7)(c)(iii)

Changes have been made to make it clear that a first home withdrawal under the KiwiSaver member rules is available to purchase or build a home on Māori land.

Background

Previously a first home withdrawal under the KiwiSaver rules was only available for the purchase of "an estate in land". This requirement generally excluded people with an interest in Māori land because they are not purchasing an "estate".

The rules also stated that a member with a previous interest in land, including any interest as a tenant-in-common, was not eligible for a first home withdrawal. A narrow interpretation of the rules automatically excluded Māori land owners because of the tenancy-in-common status of Māori land, despite the fact that the individual interest is extremely small and generally cannot be economically realised.

A change to specifically recognise interests in Māori land was required to align with the original policy intent of KiwiSaver, and the policy intent of the Kāinga Whenua funding programmes and the Government's Māori home ownership and land use goals set out in He Whare Āhuru He Oranga Tāngata - the Māori Housing Strategy and He Kai Kei Aku Ringa - The Crown-Māori economic growth partnership.

Key features

First home withdrawals can be made to purchase a dwellinghouse on Māori land.

The dwellinghouse must be intended as the principal place of residence for the member.

Prior ownership of a dwellinghouse on Māori land and an existing interest in Māori land is not a bar to accessing a first home withdrawal.

Evidence of the right to occupy the land is required, such as a licence to occupy or an occupation order.

Application date

The amendment came into force for first home withdrawal applications made on and after 1 April 2015.

Detailed analysis

The amendment has been made, in response to evidence indicating that applications for first home withdrawals to purchase or build a home on Māori land were generally being declined because the first home withdrawal was tied to the purchase of "an estate in land".

Meaning of "estate in land"

"Estate" is defined in the KiwiSaver rules as "a fee simple estate, a leasehold estate or a stratum estate" and comprises the home and the land on which the home is situated (or the right to use the land). This requirement generally excludes people with an interest in Māori land because while they have a right to use the land on which the home is situated, they do not generally purchase the land or pay for the right to use it. Only the home is purchased and the land usually remains with all of the owners as Māori land.

The previous rules stated that members with a previous or existing interest in an estate in land were not generally eligible for a first home withdrawal. A narrow interpretation of this rule automatically excluded Māori land owners because of their existing interest in an estate in land due to the tenancy-in-common status of Māori land. This rule was a barrier despite the fact that the individual interest in the estate in land is extremely small and generally cannot be economically realised.

Inclusion of "dwellinghouse"

It is now possible to make a first home withdrawal in respect of a dwellinghouse on Māori land. The dwellinghouse must be the principal place of residence for the member or the member and the member's family and the member must have evidence of the right to occupy the land on which the dwellinghouse is situated.

Evidence of right to occupy

In addition to the existing conditions listed in clause 8(7), the fund manager may require from the member's solicitor or conveyancing practitioner evidence of the right to occupy the land. This could be a licence to occupy or an occupation order.

Previous ownership

The existing eligibility rules provide that a KiwiSaver member can access KiwiSaver funds to purchase a first home if the member:

• has not made a withdrawal from any KiwiSaver scheme to buy a home;
• has never owned a property (this does not include previously holding an estate in land as a bare trustee or a leasehold estate); or
• can demonstrate that they are in the same financial situation as a first-home buyer.

Under the amendments, the first of those eligibility rules is unchanged but the second eligibility rule has been adapted to deal with the special circumstances relating to interests in Māori land.

If a person holds or has held an estate in land which is an interest in Māori land, it is ignored under clauses 8(3)(b)(ii) and 8(3B)(b)(ii). That includes:

• a dwellinghouse on Māori land (which is broadly analogous to a leasehold estate, which is already excluded from the eligibility rules under clause 8(5)(ab)); and
• an existing interest in Māori land, such as an interest as a tenant-in-common, which cannot be economically realised.

If the person with an interest in Māori land holds any other estate in land, such as a fee simple estate, they are not eligible for a first home withdrawal unless they can demonstrate that they are in the same financial situation as a first-home buyer. This approach is consistent with the existing eligibility rules.