National’s Judith Collins says the likely small size of the dwellings in the new Unitec development housing area will put pressure on borrowers, as it means banks will require a larger deposit

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.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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66 Comments

Err just a note that he actually says that Labor would NOT build the tiny dwellings that National felt were acceptable for families.

National also considers that 0 square meter dwellings are acceptable for 1% of our population.

Perhaps the banks can required to hold larger capital ratios if there is such a "high element of risk".

@JC , Banks are a business , they are neither owned or controlled by the Government , and you cannot tell them to take on business ( lending ) risks they dont want

AND

Higher Capital Ratios simply make money more expensive , now that would really make houses more unaffordable

Banks also have special privileges, such as the ability to lend money into existence and implicit taxpayer guarantees.

Capital ratios do not make the cost of money more expensive. What a load of garbage.

Oh wow!!! Holding more capital 100% makes lending more expensive. How do you not know that!?

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My goodness, what a shambles. .....

So after 6 months in office and years on opposition benches as housing sposkman, Does he know anything else at all besides spinning answers, gather cheerleaders, and cursing National,?

What would anyone conclude when you see a person so cagey and illusive as PT ?... What outcome would you expect from someone who clearly looks like he hasn't got a clue and still stabbing in the dark? .. is that all the communication skills he has?

Consultative talks with the banks? lol, is he for real? .. how long is that going to take, Months? and what is plan B if they refuse to budge ? ... because unlike PT they have a business to run !!

We are going to train the tradies to build Unitec, are we?.. and import and recruit more who are going to live in "houses" lol ... PT is funny, or he thinks he is ... at least you have to give him that !...

3000 - 4000 match boxes in 5 years ... @ 40% = 1600 kiwi built = just 320 a year ... so is that going to save the bacon, and solve our 45,000 + 7000 pa housing deficit in Auckland ? ... what happened to "project starting in 12 months " - are we having memory lapses? or was that a quick spin to get away from a tough question ?

He says, people would live anywhere! I guess he meant they are desperate ... He will face a huge wake up call when these "people" refuse to "BUY" and live in these tiny units and pay hundreds every month in running expenses !! . This CoL are going to end up being the biggest Landlord in the country .... That alone will be another circus to watch.

So let me ask the question again, what would you do if you had a clever employee like PT? assuming that you have employed him in the first place.
Sorry , this is not a personal attack on PT, but NZers surely deserve a better captain at the helm of a "housing crisis". ... Mr. T seems to be very relaxed, joking around, and haven't shown us any serious work to date, and non so far for the near and far future ... all we get is promises and patronising FHBs and the homeless people .... his actions are doubtful and do not promise a happy ending to this saga ...
Of course it is all National's fault.

You're entitled to your opinion. However I would suggest that judgement should be held back to the end of this year.
The jury is out for me. The intent is right, but I'm not sure about ability to execute

Sure, houses may be built.
However for me the jury is in already: these particular shoeboxs and the whole area will be disgusting less than 10 yrs after they are built.

Wait till the end of this year and next year, we will ... I hope like hell we are wrong about him and he will do something.

it's just worth noting that my extensive life experience taught me how to sort out a loser out of 100 in the crowd -

when a supposedly knowledgeable person ( in any subject) talks in an indecisive, evasive, cagy, using incomplete ideas, mixing emotions with logic, or could hardly be held to anything he/she says, then these are bad sign and exposes how shallow and light weighted this person is ...

Never expect miracles from such people - in the case of PT, he proves everyday that he has no in depth or practical information about how things are done in this industry, he might have surrounded himself with some similar strangers to business and industry looking for models to copy indiscriminately and is acting like a lost child in a candy store.

Usually the incompetence of such a manager brings down the whole house .

Yes, time will tell and we will be here to wave him good bye.

You obviously don't agree with Labour's policy. So what would you do? Or do you think the status quo under National was fine?

I think you are confusing the difference between effective action with just doing something. I point this out because the plans we have heard so far all sounds like they will make the problem worse not better and by building this mess it will take up resource that could have been used to do something that would actually help.

And yelling "what about national" doesn't help the problem. This government got ELECTED because they said they had a SOLUTION and every day that goes by this looks less and less likely.

I voted for change and I am getting buyer's remorse.

You're talking about John Key here right? -

"when a supposedly knowledgeable person ( in any subject) talks in an indecisive, evasive, cagy, using incomplete ideas, mixing emotions with logic, or could hardly be held to anything he/she says, then these are bad sign and exposes how shallow and light weighted this person is"

"Look, you know, at the end of the day, mom and pop investors, I don't recall exactly, soap in the showers"

Great insight there Eco and I wholeheartedly agree, may I suggest you read the transcript of pretty much any John Key statement, let me know exactly what was said of substance. Good luck with that.

PT reminds me of a dog chasing passing cars. A prefab car went past and PT ran after it "bark, bark, prefab is the answer, bar,k bark". Then a Unitec car drove past "bark, bark, Unitec housing, bark, bark".

@Fritz .......... of course the intent is right , everyone would like everyone to have a nice warm snug affordable home on a quarter acre section that they own and can buy without foregoing anything else .

That is only possible in a perfect world ............ and the world is not perfect .

Quite simply this Government cannot , with all the will in the world , build affordable houses for everyone .

They cannot build affordable houses for everyone. Buf they can do a lot more than the previous hopeless mob who had misplaced faith in the market.

What's that Homer Simpson quote that could be the motto of the Nats? Something like if you try to do anything you'll just fail miserably, so the lesson is never to try.

Most people do not want the maintenance that comes with a quarter acre, all that mowing and weeding the gardens.

Even back in the day a quarter acre site was a minority, most Auckland sections were smaller.

Sorry , this is not a personal attack on PT, but NZers surely deserve a better captain at the helm of a "housing crisis". ...

Who would get your vote? Richie McCaw? The Hosk?

Appeal to the Extreme

Description: Erroneously attempting to make a reasonable argument into an absurd one, by taking the argument to the extremes.

He was quoting Bill English when he said people would live anywhere. He was saying that unlike National they dont plan to build tiny houses.

LETS GET SOMETHING STRAIGHT ............. NATIONAL DID NOT PROMISE ANYONE A HOUSE DURING THE LAST ELECTION .

They knew they could not "build a fabulous and affordable " home for everyone who wants to buy one , and give a free one to everyone who did did not want to buy one .

Please don't shout - it makes you look foolish.

So their announcement to build 26,000 homes was false news?

https://www.interest.co.nz/property/87743/national-build-34000-houses-au...

Nationals less than 100 "affordable" homes built was the embarrassing news ; https://www.stuff.co.nz/business/97736731/Fewer-than-100-affordable-hous...

At least you got the last sentence right

@ECOBIRD ............. Yes a shambles alright !

Anyone on this planet who thinks you can force or persuade a Bank to take on a lending risk they dont want , is either from another planet or delusional ............ plain and simple.

And they have declared a War On Landlords , so they are going to have to become landlords when the landlords are all gone

This fellah gets worse by the day.
He has got no idea how big these thumberlina boxes are but there are going to be 3 to 4000?
Banks are going to lend on them!
Yeah right!
Who,is the market to buy them?
Families yeah if they don’t want bedrooms or bathrooms!

National were wise not to have promised to build houses for everyone ............... they knew, like anyone with half a brain , it could never be done by the Government .

Hell , even I know the Government cannot build houses ........... they are the Government for goodness sake, not Fletcher building

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So Judith Collins is making stuff up based off her own party's earlier direction...and this is something wrong with what Labour is doing? Despite her having no evidence this is actually what Labour is doing?

Sounds like a manufactured bone being thrown to her supporters, to me. Seems to have been picked up well, too.

Arff, arff!

Precisely. Zip of substance from any of the banks. She threw a dead cat on the table is all.

Labour , when pushed into a corner , play the 'National did ....... " card to avoid giving straightforward answers to straightforward questions .

Frankly I dont give a you - know - what about what National did or did not do , we need to know where these leaders are leading us and we require answers .

National were hardly paragons of open government themselves. It's the nature of politics since the advent of the 24 hour news cycle. Moral panic much.

"My goodness, what a shambles. ....."

Indeed - but of who's making?

Of their own making ........... lest we forget , National was not offerring anyone a free house in the last election .........Labour was !

Idiots

Free house? That's just made-up bullshit, Tiger.

There seem to be plenty of idiots of a right wing persuasion coming out with all sorts of rubbish at the moment.

Sorry boatman with comments like that you are the only idiot here...free houses..sign me up..who is giving them away?

"when a supposedly knowledgeable person ( in any subject) talks in an indecisive, evasive, cagy, using incomplete ideas"

Well, that's a bit harsh - I think John probably did his best.

"Frankly I dont give a you - know - what about what National did or did not do".

Pity - because the rest of the thinking public actually have to - lucky you, on that basis you're exempt.

This is ridiculous. Apartments under 120 square metres should actually be illegal. Ffs why is nz so architecturally and asthetically impoverished? People have to have space to enjoy and live in. God nuke NZ.

A satisfactory 3 bedroom house will fit within 100m2. Why does an apartment need to be larger?

The apartments need to be 120 m2 to allow for the garage inside the apartment.

That stairwell's going to need to be widened to accommodate SUVs.

Yeah, on an 800 square metre section with external garage, a nice big deck, pergola and a wisteria for some shade. Yep 100 square will do. Just have to quadruple bunk the four kids into the spare bedroom.

I'm talking high rise, in 21st century New Zealand. Let's have basement car parking, central heating, double glazing, wheelchair accessibility (meaning lifts), fire escapes, air conditioning, bathroom ventilation, room to bring up families, room to accommodate elders, room for elders to host children and grandchildren, room for young people to optionally flat together instead of alone, room for young people to start families. Deny people these things and you remove society's ability to grow and thrive. It's basic Maslow's pyramid for an economy on the road to self-actualisation.

Instead, we will beggar each other by underbuilding overpriced and leaking apartments that no one will want to live in. Expensive urban sprawl will then continue to reduce our productivity. You have to give people not only what they need, but what they want as well. We only get to fix this once.

Apartments under 120 sqm should be illegal??.. what are you smoking man? Thats bigger than many three bedroom houses, the one i'm in according to council records is 107sqm.

For what it's worth the average house size in 1960 was 128 sq metres - a little under 120 sq metre apartment isn't too bad in my mind.

We are not architecturally and aesthetically impoverished, we are excessive house prices impoverished and its killing our economy IMHO.

When I bought our house it was affordable by me, today looking at its CV and even having a 100%+ wage increase in that 20years today couldnt get a mortgage to buy it on my income, that is stupid. I mean go to the calculator here in and put in say 550k that is $1600 a fortnight, V my mortgage, that was <$500 so over $2000 a month I would have to spend, would have for a pension plan in my old age or even invest directly etc etc.

PS Reality check that 120sqm is huge, and just not needed for quite a few ppl/couples.
I mean a 120sqM would be a pretty generous 3 bedroom apartment. I mean my house is 130sqM with 2 master bedrooms, ensuite on one, a mid sized and a single sized bedroom, a decent bathroom, 17sqm lounge and the same again for kitchen/dining plus a 1 1/2 garage / man cave of 17sqM.

Yes, but surely you have a nice big back yard? I agree that we urgently need more dwellings here. My argument is that a high rise style apartment in NZ should be spacious in order to compensate for the loss of private outdoor space. I don't want a bunch of shabby, substandard and leaking 30 square metre hovels that deny people some basic comfort and well being.

Lenders do have preferences but that's likely because presently there isn't an active/established market for houses at these floor areas as so few are built. If banks won't finance these perhaps it's time for RBNZ to look at reducing constraints on mortgage lenders in this sector, after all their rates strategy has been a contributing factor.

People are absolutely clamouring for smaller 1 and 2 bed units, but too bad for them, it's practically impossible to build them because covenants, insane troll logic from banks etc. Actually build some and people would buy (and rent) the hell out of them.

I am sure there is some real demand for such small places, but I suspect the demand is mostly driven on lack of affordability and not on need/want for something that small.

Its interesting though that the Govn is hell bent on delivering what can easily become relatively un-wanted housing which then starts to look like slums say 20 years from now. The banks however see this reality I suspect so it depends on if the Govn now takes this on board, and re-designs or decides to enter the mortgage market using tax payers $ or acts as a guarantor using tax payer $s.

For me what we are seeing really in desperate, ill-considered acts by this Govn as its effectively pinned into corner with no where to go but its expected to deliver. What we shouldnt forget however is that National got "us" to this state after 9 years of in-action backed up be excessive immigration.

Can't say I often agree with what you say steven but have to admit I agree with you on this.

Are they really pinned into a corner? I can see loads of improvements to the building process in NZ. For a start the building code is out dated and protectionist. Materials are a ripoff because everything must be an NZ standard with high compliance costs. The people doing consent paperwork are learn-resistant.

Labour et al could open up the standards to a boat load of North American products for example and instead of using councils as quality control require mandatory 20-year weather tightness insurance on every new build. The "master builders" limited liability crap the industry runs on is hardly worth the paper it's printed on.

Currently the building code requires a bunch of paperwork when the houses are made out of rubbish like aluminium window frames, cold concrete floors and prematurely harvested pinus radiata. It really begs the question; If it's going to be crap anyway, why not forgo all the paperwork and let people import a cheap kitset for a 1/4 of the price. The councils and building regulations are anti-DIY, anti-owner and pro-Fletchers.

Labour et al could have put down a land tax before buying the UniTec land but they don't want to upset the apple cart. Meet the new boss, same as the old boss, but with a different shirt.

PT is pretending this can't be done. It's absolute bollox.

what constraints exactly?

The RBNZ cant force lenders to finance prefabs Squishy. Commercially they are very risky. Ditto with shoebox type apartments. The rbnz cannot force the banks to make risky loans. In fact this would go against the rbnz mandate, which is to promote financial stability.

See interesting article on the Unitec developement :

https://thespinoff.co.nz/business/06-04-2018/the-unitec-carrington-devel...

PT comes across as amateurish on this matter. I suspect his intentions are good, however lacking in delivery.

I doubt we will see one KB house at unitec during this term of government.

And to be frank that wouldn't be a bad thing as I fear the site will be a ghetto inside 10 years if they continue down the prefab, 37m2 shoebox type philosophy that goes under the motto "affordable housing"

Seriously you would need to be so flippen gullible if you think that this development will get off the ground
With 4000units or prefabs.

Twyford and Ardern are just as useless with spurting off without any details on anything.
Not sure what the size of these units are but we are going to build them as that is what Ihave said.
FFS the National government should be in boots and all at this Coalition of Absolute Losers in regards to the BS tha they constantly come out with.
They have come out with nothing to increase business productivity, instead they want business to pay increased wages.
Spoke to an owner of a coffeee franchise in a ChCh who told me that when wages increased to $20 he has done the sums and he will need to be charging at least $8 for a coffee.
Who is going to pay that I say???
Things are going backwards quicker than it thought they would!!!

TM2...they seem to manage in Australia:
Barista Salaries in Australia
Salary estimated from 1,223 employees, users, and past and present job advertisements on Indeed in the past 36 months. Last updated: 3 April 2018
Location
Average salary
$22.64 per hour

A survey of capital city coffee prices by coffee machine maker Gilkatho identifies Perth as the most expensive place to buy a takeaway cappuccino, with Sydney the cheapest. Prices have gone up 4.2 per cent since the same study was conducted last year; the national average price is $3.47. Here are the figures:

CITY PRICE
Sydney $3.28
Melbourne $3.36

Since nobody is going to pay $8 for a coffee the landlord will have to drop the rent or there will be For Lease navidad decorations everywhere.

The ads next to those figures are for part time jobs. How many cafés would offer full time work at those rates. Anyone who has worked in Sydney and Melbourne knows that there's a mad rush pre work and at mid morning. It's easy to pay good wages if you resource for busy times only.

Good point. In soviet New Zealand student immigrant worker pays you. At least that's how the Masala type restaurants etc work and there must be thousands more businesses doing under the table deals.

Maybe he should consult with some of the specuvestors in here...they manage a 'business' that returns a loss for it's entire life...

Govts. telling banks how to lend? Wasn't that the beginning of the US subprime mortgage crisis?

I am no great believer in Labour but I really do think we are putting too much blame on Phil.
He is being guided by MBIE. Readers should look at the reports coming from them. For instance carefully read MBIE's report to the Minister on letting fees. They even admit they are not sure how many tenants pay letting fees. Other similar comments coming from MBIE the department charged with controlling the building industry looks as if they get the tea lady to write the reports.