Housing Minister Megan Woods announced a $350 million residential development response fund on Friday, using underwrites to support the sector and to minimise the economic impact from Covid-19.
She said the fund would help progress “stalled or at-risk developments that support our broader housing objectives such as ensuring the supply of affordable housing & providing jobs”.
The fund would use Government underwrites to back developments.
“As we saw following the global financial crisis, when house building halved between 2008-11, credit can be harder to access in uncertain economic times. We know from talking to the building sector there is a relatively solid pipeline of construction activity until the end the year, but the outlook beyond that is unclear.
“Providing assurance through the fund will ensure developers can keep building homes, and workers employed. It’s estimated the fund will maintain around 15,000 jobs, and the building of around 4000 new homes that otherwise might not be built because of barriers to developers securing finance.
“The post-GFC economic recovery was slow & difficult, so we are determined to do things differently. The measures I’m announcing today will help avoid a repeat of the worst impacts that the GFC had on jobs & housing. The Infrastructure Reference Group warned in their report of the potential for the fallout from Covid-19 to drag down the rate of new residential construction, particularly due to the reluctance of banks to provide finance over the next year.”
The new fund comprises $100 million from the Covid-19 Response & Recovery Fund & $250 million of redirected funding from the KiwiBuild appropriation following last year’s reset.
Dr Woods said most of the funding would be recycled & returned to the Crown over time.
“This new fund will sit alongside our KiwiBuild programme, which is continuing to prioritise a pathway to home ownership for first home buyers. Following engagement with the sector on what’s needed to ensure we continue to deliver affordable housing, we are making further refinements to the KiwiBuild settings. We simply must not lose sight of the importance of opening up home ownership as we recover from Covid-19.”
She said the setting would be more flexible so, where an eligible buyer hasn’t been found, the programme will allow:
KiwiBuild homes to be sold to progressive home ownership providers, community housing providers and, if the home is suitable, to Kainga Ora for public housing.
Up to 25% (previously 15%) of KiwiBuild homes in an underwritten development may be sold on the open market to further incentivise lenders & developers to keep delivering new housing.
In addition, Dr Woods said the Government’s Land for Housing programme could add a $250 million dollar fiscally neutral allocation to further support the development of affordable homes.
Under the Land for Housing programme, Crown or private land can be acquired for housing & sold to developers, including iwi, on a deferred payment basis in exchange for the delivery of affordable homes & public housing.
Dr Woods said direct feedback to officials & ministers through the construction sector accord had been critical to shaping the Government’s response.
Labour entered Government in 2017 promising a KiwiBuild programme which would deliver 100,000 quality, affordable homes for first home buyers over the next decade. The tally in the year to May, according to the Ministry of Housing & Urban Development’s housing dashboard, was 452 KiwiBuild homes built, 589 sold since the start of the programme & 1051 under construction.
Attribution: Ministerial release, housing dashboard.