Bank lending restrictions on smaller dwellings may prove to be a roadblock for the Government’s KiwiBuild programme.
But Housing Minister Phil Twyford insists he’s hammering out details with mortgage providers to overcome this issue and will have something concrete “within the next few months.”
On Tuesday, National’s Housing and Urban Development Spokeswoman Judith Collins said the planned dwellings on the new Unitec development site will be too small and, as such, will force banks to impose lending restrictions.
New Zealand Bankers’ Association chief executive Karen Scott-Howman says size is among a number of factors that banks may take into account when looking at lending on apartments
“When lending on small apartments the bank needs to consider if it will get its money back in case of default. It may not, for example, in locations where demand for very small residences is limited,” she says.
BNZ, ANZ, Westpac and ASB all confirmed to Interest.co.nz that lending restrictions, for example, a higher deposit, are required on smaller dwellings.
A Westpac spokesman says the bank would normally look for a deposit of about 40% for an over 50m² apartment and about 50% for one 50m² or less.
ANZ says it has “no appetite to lend for apartments less than 30 square meters.”
This could be a problem for the Government as Collins says, Twyford suggested the size of some of the dwellings in the new Unitec development site will “likely measure 30 square meters for studio dwellings and 45 square meters for one or more-bedroom dwellings.”
Her comments stem from questions she put to Twyford in the House on Tuesday about the new housing project.
Twyford said when Unitec carried out its master planning for the site, it indicated it could fit 2700 homes in the area.
The Government wants to squeeze between 3000-4000 in the same site.
Asked by Collins what his expectation of the minimum floor area that a KiwiBuild dwelling must have, Twyford said the unitary plan, approved by Auckland Council in mid-2016, “set minimum floor sizes of 30 square meters for studio dwellings and 45 square meters for one or more-bedroom dwellings.”
He did not say what size he expected the dwellings to be.
Poking fun at Bill English
But speaking to Interest.co.nz on Thursday, the Housing Minister said that answer does not suggest that is how small the dwellings in the area will be, as suggested by Collins.
In fact, he said in his answer to Collins, he was actually “making fun” of former Finance Minister Bill English who had advocated for apartment sizes like that.
He cannot yet say how big the dwellings in the area will be as the modeling has “yet to be done.”
But he does rule out them being 30 square meters, despite the fact that size is allowed under the Auckland Unitary Plan, he says.
Asked about the funding restrictions banks will impose on smaller dwellings, Twyford says he is aware of the issue and is having “ongoing discussions with the banks about that.”
The outcomes of those discussions, he says, will become known “within the next few months.”