When is a first home not really a first home?

The story

Maxine wanted to buy her first home in an apartment building where she already lived.  The apartment Maxine wanted to buy was already tenanted on a fixed term tenancy, due to expire in six months.


Maxine applied to her superannuation scheme, operating under the same rules as KiwiSaver, to withdraw funds to purchase her first home.  Maxine signed a statutory declaration that the apartment would be her principal residence as soon as the fixed term tenancy ended.


The trustee declined Maxine’s first home withdrawal application because it considered any tenanted property to be an investment property and not a first home for the purposes of the KiwiSaver Act 2006.  The KiwiSaver Act requires a first home to be used as Maxine’s principal residence.  The trustee said Maxine would need to purchase the property with vacant possession to be able to withdraw funds under the first home withdrawal provisions of the KiwiSaver Act.



Maxine did not accept the trustee’s decision, saying the KiwiSaver Act said nothing about vacant possession.  Maxine had signed a statutory declaration that the apartment would be her principal residence and considered the trustee was being unreasonable. 


Maxine also noted that because she was living in the same building, paying rent for essentially the same apartment, she was not profiting financially while she waited to move into her new apartment. 


The tenants were not prepared to terminate the tenancy before the end of the fixed term.  Maxine was unable to delay the purchase until after the fixed tenancy ended because she had negotiated the purchase price on the basis of an early settlement date.


The trustee submitted it is industry practice to require vacant possession to reassure the trustee that the property will be used as a principal residence.  The trustee said it was concerned it was six months before the tenancy expired and in that time Maxine may decide not to move into the apartment. 

FSCL’s review

Taking all the circumstances into account we had difficulty understanding the trustee’s decision to decline Maxine’s application.


We accepted that generally a trustee may require vacant possession because a tenancy suggests a person may not be intending to use the property as a principal residence.  However in this case Maxine had provided a statutory declaration confirming the property would be her principal residence as soon as the fixed tenancy ended.  Maxine had explored all the options, and had explained why she was unable to immediately move into her first home.


The trustee has full discretion to approve or decline an application to access funds for a first home purchase.  We cannot substitute our view for that of the trustee.  However in this case we were concerned the trustee had not correctly applied the KiwiSaver Act asked the trustee to review its decision.



The trustee reconsidered, and asked Maxine to sign a more detailed statutory declaration tailored to her personal circumstances.  Maxine agreed to sign the statutory declaration and the trustee released the funds.