Beware of difficulties withdrawing your KiwiSaver funds when planning on buying a Company Share apartment…

A couple were keen to buy an apartment in Wellington and were very happy to find an apartment that was within their price range. 

They were keen to make an unconditional offer but were advised not to do so by their lawyer, as it was a Company Share apartment and they did not have finance approval, nor did they have confirmation from their KiwiSaver provider that they could withdraw their KiwiSaver First Home funds.

It is important to note from the outset whether the apartment you are interested in is part of a Unit Title complex or a Company Share complex. 

Company Share apartments can be more difficult to obtain finance for, and can be almost impossible to withdraw your KiwiSaver funds for.

The reason for this is that they are a different form of ownership to other types of property - when buying a Company Share apartment, you are acquiring shares in a company, rather than receiving title to the apartment.

It is a requirement of KiwiSaver legislation that you are purchasing ‘an estate in land’, which shares are not.  On this basis, most KiwiSaver providers will not approve the withdrawal of KiwiSaver funds for the purchase of a Company Share apartment. 

It is for this same reason that clients will not be eligible to apply for the Housing New Zealand First Home Grant (a grant from the Government based on certain price and income caps) for the purchase on a Company Share apartment. 

If you are reliant on these contributions to finance your purchase, you may need to explore other lending options.  Furthermore,  as a purchaser you should include a suitable “subject to finance” condition in the Agreement for Sale and Purchase, as well as make enquiries with your KiwiSaver provider prior to signing an Agreement.