The news follows recent changes to the government's Kiwibuild scheme
New Zealand Mortgages & Securities (NZMS), Auckland's largest non-bank development financer, has now announced a dedicated Kiwibuild fund for qualifying developers, off the back of the government’s latest changes to its Kiwibuild scheme.
Changes to the Kiwibuild scheme include lifting the income thresholds for buyers and an increase to the price caps for one- to three-bedroom Kiwibuild homes. The price cap for a three-bedroom Kiwibuild property in Auckland is now $860,000, from $650,000.
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James Kellow (pictured above), director of NZMS, said the changes will give developer clients the confidence and support to get projects started and the scheme a much-needed shot in the arm.
“Auckland developers have struggled to make Kiwibuild work in the past couple of years,” Kellow said. “It hasn’t been a competitive option, simply because the price caps have fallen short of what it costs to build the houses. However, $860,000 is now genuinely workable for Auckland property developments. I firmly believe lifting the price caps will be successful, leading to the construction and delivery of many more Kiwibuild houses.”
Kiwibuild increases the pace new homes come to market by underwriting a portion of homes in new residential developments. Developers, in turn, agree to sell the underwritten homes at or below the Kiwibuild price caps.
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NZMS has allocated $600 million of funding, available to build some 1,000 Kiwibuild homes for Auckland residential development projects beginning before the end of 2023.
“If developers have the sites, we will support a partnership with Kiwibuild and provide up to 100% of the developer’s funding requirements,” Kellow said. “Kiwibuild is all about unlocking development potential and bringing forward construction dates, and that is what we’re now putting our hand up for.”
Kellow said the dedicated Kiwibuild fund capitalises on the non-bank’s proven experience on earlier successful Kiwibuild projects in Auckland’s Papakura, Wattle Downs, Henderson, and Glen Eden.
“NZMS loves supporting Kiwi developers, with our lending book increasingly favouring higher density affordable townhouse projects,” Kellow said. “The Kiwibuild changes now give us real confidence to make more money available for good projects that will now stack up. The government’s announcement makes Kiwibuild more doable for lenders and developers and that simply means more affordable new housing for Kiwis. This is a timely boost for the residential development sector.”
To date, 1,380 Kiwibuild homes have been built, with 1,223 under construction. Many of the earlier completed Auckland Kiwibuild houses were financed by NZMS.
