Helping family into a home

Question from Jennifer updated on 7th April 2017:

I own two properties in Auckland. On one I built a minor dwelling on a few years ago. The other is 675sqm with a 80sqm home at the front.

My question is of wide range. I am wanting to help my daughter and son-in-law into a home. They are basically in no position to do themselves: she is a stay at home mum and he, although in the same job for 10 years, is still earning under $50,000. The goal is for them to own a second dwelling on the aforementioned property.

What would be the best avenue to take to get there? Do I build and own and take rent or can I gift them the back land so they own it? They are expected to be able to get a mortgage of $250,000 - which is enough to build the house as long as the land doesn't cost them. But I've learnt they can't use their KiwiSavers in this situation. Any advice would be appreciated.

I only have three years until my properties are all freehold so equity isn't an issue, aside from the obvious risks. Am I right to believe that you can't subdivide once a second dwelling has been built?

Our expert Kris Pedersen responded:

Get some more advice on the situation whereby your daughter and son-in-law can’t access their Kiwisaver if you gift the section to them. There might be some way where you can sell them the section but gift the funds to buy it... So that effectively it is a zero sum game for you but in doing so they are still eligible for the ability to utilise their Kiwisaver funds. If you own the land they will not be able to get a mortgage on it - unless you are also putting your name on the mortgage which I would recommend you avoid.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies.

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