KiwiBuild Buying off the Plans

Details

The New Zealand Housing market requires that, predominantly, building developers need to meet financial institution presale thresholds before development funding is available.

The KiwiBuild Unit (the Unit), within the Ministry of Business, Innovation and Employment (MBIE), is as part of a broader initiative to facilitate the development of affordable dwellings in New Zealand, seeking to assist and support transformational change in the way affordable dwellings are delivered.

The KiwiBuild Buying off the Plans initiative is expected to be flexible in form, and suitable for a wide range of development proposals.

The initial approach from the Unit is to utilise an underwrite arrangement to support qualifying developments (the Underwrite). It is expected that this support through the underwrite will:
• reduce development delays associated with obtaining presales (and associated marketing costs);
• contribute to a reduction in costs (particularly land holding costs) if qualifying developments can proceed to market more readily;
• enable eligible purchasers to acquire dwellings; and
• facilitate the market exploring new ways of delivering affordable dwellings.
The support from the Unit for qualifying developments is seen as a way of also reducing any potential risk premiums built into developments/lending margins which developers may be exposed too in return for development of KiwiBuild dwellings. Over time, the Underwrite is anticipated to become one of a number of tools available to support qualifying developments.