KiwiBuild underwriting promising for developers
Head of Advocacy, Matt Paterson, explains why the Government's announcement to underwrite KiwiBuild developments is hugely promising for developers and how you can get a piece of the pie.
On Tuesday, Housing Minister Phil Twyford announced the Government initiative to buy private developers' existing plans to add homes to the KiwiBuild tally. The Buying off the Plans initiative will see the Government use part of its $2 billion KiwiBuild fund to underwrite KiwiBuild compliant homes by either guaranteeing a minimum price or direct purchase of completed dwellings to be resold as KiwiBuild homes.
For property developers, this is a promising initiative.
The Minister has listened to the development community and understood the barriers we face in delivering affordable ‘KiwiBuild’ homes.
One such barrier is the availability of finance, with bank requirements that a certain number of homes are pre-sold before they will lend money to start construction often prohibitive. This guarantee should help provide reassurance to banks and other financiers to proceed with KiwiBuild developments. It helps provide certainty in what has been a risky part of the market.
This is a significant win for Property Council and our members. This initiative stems from the close engagement we have had with Minister Twyford over the years and - more specifically - engagement with Property Council and residential development members since he became Minister.
Your voice has been heard.
How to get involved
The Buying off the Plans initiative is specifically seeking proposals that either promise volume or innovation, for developments in Auckland, Wellington, Hamilton, Napier-Hastings, Queenstown-Lakes District, Tauranga, Whangarei District and Nelson-Tasman. Proposals for other areas will also be considered. For this initial approach to market, priority will be given to developments that are able to commence within the 2018/19 and 2019/20 years. The opportunity will be re-opened later in 2018 for years 2020/21 onwards.
We encourage developers who have KiwiBuild projects in the pipeline to submit an expression of interest through the Government’s tender portal GETS before the closing date on 8 June 2018.
We expect this process to be a work in progress as both the Government and developers ‘road test’ the mechanism, but are hopeful that this initiative will bring about a positive outcome for both developers and the Government.
Further information is available on the KiwiBuild website.
Author | Matt Paterson
As Property Council New Zealand's Head of Advocacy, Matt leads our team of advocacy advisors, researchers and public affairs experts. Based in Wellington but frequently found in all corners of the country, Matt has his finger on the pulse of central Government, providing valuable insights for our membership and acting as the conduit between our members and the country's movers, shakers and policy-makers.