Government asks to buy developers' plans to contribute to KiwiBuild target

Tuesday, 8 May 2018

Housing Minister Phil Twyford says buying plans from private housing developers will help the Government reach its 100,000 KiwiBuild homes target.

The Government wants to buy private housing developers' existing plans to add homes to the KiwiBuild tally.

Housing Minister Phil Twyford announced the 'buying off the plans' initiative on Tuesday.

The initiative would see the Government use its $2 billion KiwiBuild fund to purchase developers' land to build KiwiBuild homes on, or purchase existing dwellings to be resold as KiwiBuild homes.

It would speed up residential developments that struggled to find financing and cause houses to be built faster, Twyford said.

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However, chief forecaster at economic consultancy firm Infometrics, Gareth Kiernan said it would not increase housing stock much.

It would speed up developments and possibly get cheaper homes on the market sooner, but besides that, the effect of the initiative would be 'marginal,' he said.

Twyford said it would increase the number of homes built by the private sector because it gave developers the certainty to keep building.

The Government's involvement in their plans would influence them to build more affordable homes, appropriate for KiwiBuild, he said.

The plan would prioritise developments that had already started or would start next year, particularly in Auckland, Wellington, Hamilton, Napier, the Queenstown-Lakes district, Tauranga, Whangarei and Tasman.

Twyford wanted a number of the contracts to be under way by the second half of this year.

Developers could tender for contracts from Tuesday until June 8.

The plan would help the Government reach its KiwiBuild target to build 100,000 affordable homes in 10 years, he said.

Property Council New Zealand chief executive Connal Townsend said the initiative worked in favour of the Government and residential developers who struggled to lend money from 'nervous' banks, he said.

It reduced risk for the residential construction industry that faced hurdles from labour and building material shortages, he said.

'It's not a silver bullet, but a very helpful initiative. [It] speeds up the process hugely. Time is money to a developer.'

Twyford met with residential developers in Auckland to tell them of the initiative late last month, he said.

Townsend said none of the council's members had signalled their intention to apply to sell their plans to the Crown yet. Developers were typically coy about discussing their plans in a competitive industry, he said.

Whether developers would prefer to sell land or dwellings to the Government would depend on their balance sheet, he said.

No KiwiBuild homes have been built yet.

Twyford said 30 three to four-bedroom homes would be completed at a South Auckland development before Christmas.

Answering a question in Parliament on Tuesday, Twyford said the KiwiBuild scheme would begin next week on Thursday when the budget to fund it was announced.

The Government would build 16,000 KiwiBuild homes in the first three years of the scheme - 1000 in the first year, 5000 in the second and 10,000 in the third, he said.