LEGAL UPDATE

SEPTEMBER issue | 2018 

Welcome to our September Legal Bulletin which covers:

  • Information Required from Clients - Anti-Money Laundering and Countering Financing of Terrorism Act 2009
  • Kiwibuild
  • First-home buyers and parental assistance

INFORMATION REQUIRED FROM CLIENTS

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) requires agencies such as Banks to obtain information from their clients verifying the clients’ identity.

On 1 July 2018 law firms became subject to the AML/CFT, which means we may ask you for verifying information the next time we act for you in order to meet the AML/CFT requirements. The obligations arise from New Zealand endeavouring to reduce the frequency and effect of criminal activity including money laundering and the financing of terrorism.

The next time you instruct us on a matter, we may ask you to provide:
  • verification of your name and date of birth by way of your passport, driver’s licence, or birth certificate; and
  • verification of your address by way of a bank statement or utility invoice.Activities involving a company or a trust may mean we require verifying information about all people associated with the entity, including directors and shareholders, trustees and beneficiaries. In some cases we may request additional details, such as information about the source of funds or wealth for a trust.
As you will appreciate we are required by law to obtain this information in order to carry out certain work for you. Please bear with us. As always we are happy to answer any questions you have about these requirements. 

If you would like further information regarding the AML/CFT requirements please contact Diako Ishmael on (04) 974 4707 or diako.ishmael@mbhlaw.co.nz.

KIWIBUILD

The Government is committed to progressing its election promise to build 100,000 new homes in the next decade for the purpose of increasing home ownership in New Zealand. The project is called Kiwibuild.

Kiwibuild home eligibility and selection process

Kiwibuild home applicants must:
  • be a New Zealand citizen or permanent resident;
  • earn no more than $120,000 per annum as an individual, or no more than $180,000 per annum as a couple;
  • be below the asset-cap for their region should they classify as a “second-chancer”;
  • live in the property for three years before selling it or renting it in its entirety.
People who meet the criteria will have their names entered into a ballot. As Kiwibuild homes become available, names will be drawn from the ballot and those selected will be given an opportunity to purchase a property.

Kiwibuild homes will cost no more than $500,000 except in Auckland and Queenstown where the cost will be:
  • no more than $650,000 for a three or four bedroom home;
  • no more than $600,000 for a two bedroom home; and
  • no more than $500,000 for a one bedroom home.
Those in the market for a Kiwibuild home may also be eligible for, or have access to, other assistance for the purchase of their home. Schemes like the KiwiSaver HomeStart Grant, Welcome Home Loan (underwritten by Housing New Zealand), and KiwiSaver first home withdrawals are available many first home buyers and should be explored as options when considering finance for a first home purchase.

Buying off the Plans initiative

Another Kiwibuild initiative involves “buying off the plans”. This initiative involves the Government underwriting the purchase of new homes off the plans which are being built by the private sector.

The first round of the buying off the plans initiative closed on 8 June 2018. Those still interested will be able to participate through the Government electronic tenders service by another round slated for later in 2018. 

If you would like further information regarding Kiwibuild then please contact Harry Rattray on (04) 974 4340 or harry.rattray@mbhlaw.co.nz

FIRST-HOME BUYERS AND PARENTAL ASSISTANCE

Today’s residential property market is highly competitive, and many younger first home buyers are seeking help from their parents to get on the property ladder. 

It is important to be aware of the issues which may arise and should be addressed when considering giving or receiving parental financial assistance. Points which should be discussed include:
  • is the contribution to be a loan or a gift? If a loan, on what terms (e.g. interest) and when does it need to be repaid? 
  • is there to be any security given in support of the loan?
  • how is the property/loan/gift to be dealt with in terms of any relationship which the recipient child is party to, and the potential effects of a claim by the partner should that relationship end? 
  • how does the gift or loan impact on other members of the family and any equality between them should one or both of the parents pass away? For example, does there need to be an amendment to a Will or Memorandum of Wishes to ensure equality between siblings?
The points above are examples of what is recommended to be discussed and agreed between the parties. It is generally a good idea when purchasing a property for the parties to review their Wills and other asset protection documents to provide some certainty about the distribution of assets should death or a significant disability occur – including how any parental loan is to be dealt with.

When the key terms are decided, then it is important to put them in a formal Agreement. Doing so then minimises any family dispute which may otherwise arise later in time.

If you would like further advice regarding arrangements between family members to assist with the purchase of a property, then please contact Siri Nicholas on (04) 974 4705 or siri.nicholas@mbhlaw.co.nz

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Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any matter.

 

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