The tweaks Housing Minister Megan Woods is making to KiwiBuild are largely aimed at preventing a repeat of the scenario the Government now faces where it’s spending $207 million buying unsold KiwiBuild houses.
Woods on Wednesday said the Government was going to buy 461 KiwiBuild homes in Wanaka, Canterbury, and Te Kauwhata (in the Waikato) that weren’t selling or weren’t expected to sell.
She didn’t expect the Government to take a “haircut” as it on-sold these to regular buyers.
While relatively minor, the changes being made to KiwiBuild are aimed at preventing taxpayers being left out of pocket.
Firstly, the Government is reducing what it will pay developers if they can’t sell their KiwiBuild houses.
Speaking to interest.co.nz, Woods said the extent to which the underwrite, or government backstop, would be reduced would vary between agreements.
“What I can give you an indication of is that it [the underwrite] won’t be 100%,” she said.
Pressed on whether it would be 50%, 70%, etc, Woods said: “It won’t go as low as 50%. I don’t think you’d see a developer that will be accepting an underwrite for less than what they’re building it.”
Woods believed removing the 100,000-house target would prevent the Government from underwriting basically any development it could get its hands on to get runs on the scoreboard.
She conceded the Government mucked up in this regard and KiwiBuild houses ended up being built in areas where there wasn't demand.
While developers are set to shoulder an unspecified amount of extra risk to taxpayers’ benefit, Woods said tweaks made to broaden KiwiBuild eligibility should give them confidence demand was being bolstered.
The tweaks, detailed in this story, will make it easier for people who have owned homes in the past to qualify for KiwiBuild and enable owners of one-bedroom studios to sell up within a year rather than three years.
Those who qualify for government-backed mortgages will also only need a 5%, rather than a 10% deposit, and first home buyers who qualify for government grants and want to team up with others to buy property, won’t have their grants capped.
Looking ahead Woods expects a larger portion of KiwiBuild houses to come from government-led developments than is currently the case, where the bulk of building is coming from private developments underwritten by the Government.
She wouldn’t detail how this weighting would change.
Role of organisations that already provide progressive home ownerships schemes unknown
As for the progressive home ownership schemes the Government committed to introducing, Woods said she expected rent-to-buy and shared equity schemes to cater to between 2,500 and 4,000 households over four years depending on how they are designed.
She was vague on how community organisations that already provide these schemes would be brought into the fold, but said the Government planned to scale up work already underway.
Habitat for Humanity, for example, has helped more than 500 families into home ownership through its rent-to-buy scheme.
“This a quantum shift,” Woods said.
“[Community housing organisations are] really excited about the fact that we want to get into this space and we want to work with them to put the final design in place, because these are people who are successful in doing this. They know how to do this…
“We know we will have a strong relationship with those who have experience in this space.”
Not for profit organisations as well as property developers have been urging the Government not to crowd them out.
Woods expects a progressive home-ownership programme to be up and running next year.
She was coy when asked whether house prices still needed to fall, but said the market was starting to respond to tweaks made by the Government.
For more on these changes, see this story.
58 Comments
$207M to buy unsold kiwibuild homes??? This needs some explication. Is the $207M only for the currently unsold kiwibuild homes? Is it for the current plus the currently under construction kiwibuild homes that are expected not to sell?
This is a rather large amount of money.
I think the reboot is brilliant. Rent to buy is critical to enable a long needed rebalancing against the neoliberalist imposed rental serf system many NZers have been sufferring under for far too long. A well earned 'screw you' to the landlord class, get lost and and stay lost, the housing experiment is over.
Seriously, the Rent To Buy, is a load of codswallop.
It won’t and can not be done, as the figures will just not add up unless the taxpayer is going to accept a very low rent for the new build KiwiFlop houses.
The shared equity is also a waste of time as who in their right mind is going to put a lot of money into a KiwiFlop house and want to share any profits with someone else.
You are dreaming if you believe that Megan woods has got any more idea than Twyford in regards to putting low income people into their own homes.
Banks certainly won’t be interested when they know what they are dealing with.
I find myself agreeing with you. No one has bothered to do the calculations and they aren't admitting that this is ultimately subsidised housing. I've said previously they need to clear out all the idiots at the top of the housing ministry that are getting in the way of anything happening. They would be better off on the dole rather than getting high pay for a job they know nothing about.
The only thing I read in this reset is that you only need 5% deposit now. Which means more borrowers (theoretically) eligible for propping up the ponzi scheme. Which is all they care about. Not affordability. Not Kiwis. Just an agreeable amount of ever increasing debt against NZ property to keep the system afloat for another go around the sun. The debt hangover will be someone else's problem. Or inflation will make us all millionaires in time.
Except those 5% deposit loans are govt gauranteed .. (it'll be me and you paying for them if it all turns to custard).
The removal of the asset test for second chancers looks like a perfect springboard for acquiring a rental unit if you scrape under the income cap and already have some equity in a properry. Sell and you instantly qualify as a second chancer.
A friend of mine is developing 68 appartments in Henderson two-thirds of which are Kiwibuild. He has been working on it for 18 months, it's fully designed, engineered, finance has been sorted, he has obtained a resource consent and the building consent is due this month. I wonder where the changes to KB leave him?
No that's not the case, KB gave hime and more importantly the banks who finance the project, the assurance that the units were going to be sold and sold at a minimum price. Without it the project may not stack up anymore, I don't know, also he already spent millions so far (buying land alone cost several millions)
But Yvil, there's no downside to the housing market you've said it yourself countless times on this website recently. Why does your developer friend need welfare from the state? He won't have any issue selling his properties, house prices are tipped to soar by 20 percent over the next four years.
https://www.stuff.co.nz/business/property/113453987/house-prices-nation…
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
NZ Dan, I think you're confusing where existing house values are heading over the longterm with new development. They are very different indeed, existing housing is low risk - slow gain, development is high risk with potential for massive gains or loss in a relatively short time.
I know you shouldn't judge a book by its cover but Megan Woods just doesn't look like she's completed that many developments herself,
- Has she done any developments before?
- Does she have solid experience in getting finance and costing?
- Delivering projects on time and within budget?
- Does she fully understand what project management entails?
"Woods on Wednesday said the Government was going to buy 461 KiwiBuild homes in Wanaka, Canterbury, and Te Kauwhata (in the Waikato) that weren’t selling or weren’t expected to sell.
She didn’t expect the Government to take a “haircut” as it on-sold these to regular buyers"
Translation, the houses didn't sell but we, the government, can sell them… BS, absolute BS, why would the government be able to sell these house "without taking a haircut" when they didn't sell under KB?
The truth is you and I taxpayer are going to subsidise the sale, at a loss of these ex KB houses.
They couldn't sell to people who qualified for KB (ie, under income cap, no existing property/significant assets to leverage off) , but the govt can probably sell them now, to people don't qualify for KB, ie, investors. I'm sure there is some demand for another bunch of AirBnBs in Wanaka, or Holiday homes for corporate high flyers, or Boomers who will leverage off the existing property and retire to Wanaka.
“This a quantum shift,” Woods said.
She really likes the phrase - it sounds very decisive and powerful!
But, there is a "small" thing (pun intended) - one would think that a minister with PhD degree in history would know the meaning of the word "quantum" which is normally used to describe things that are incredibly small!!!
Or, perhaps, she is just stating the obvious ... incredibly small shift (if any)! But, it sounds good ... Oh, my God!
I am struggling to see the Woods from the tress on this one ............. so we the NZ Taxpayers, are buying unsold houses in Wanaka ( and other Holiday / tourist hotspots ????) from developers who cant sell their stock.
This at a time when the Government is scrambling for money , and is increasing taxes on everything that passes wind , and some
What kind of a #()Ck I>g mess have we got ourselves into with this hopeless coalition of losers ?
The marketing trick/con that is happening here is that FHB are less sensitive to the end price they pay as to whether they can afford the entry price ie the deposit, and then secondly the repayments. In fact a developer can front load the price and more (to a degree) to cover anything thing they may have lost in receiving a larger deposit.
Since this Govt. scheme is making deposits and repayments easier, expect to see prices increase as the customers won't care and basically the value is being set by the fact that people will sign up for that amount, although it will be interesting to see what the banks say about this. If the Govt. is providing finance/security for this over value, then no issue from the banks.
FHB's are now locked into higher debt, and should the market fall, then their equity will be first on the line.
And the housing quality is crap.
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