Te Tūāpapa Kura Kāinga – The Ministry of Housing and Urban Development (HUD)’s Residential Development Underwrite has been of interest.
Here are some key points to keep in mind:
1. The underwrite is time-limited
The underwrite is to help maintain capacity and help the sector recover from the downturn. It won’t be an option forever so, if you are interested, move relatively quickly. As the sector recovers, there is a good chance new underwrites won’t be written (but any underwrites given will remain valid).
2. A deposit will not be paid by HUD
That has typically been accepted by development financiers on prior Kiwibuild projects, given the strength of the underwriting party (the Crown).
3. There are no restrictions on buyer type and no price caps
Based on the criteria HUD has set, it would appear, however, that the underwrite is more likely to be given for affordable housing types.
4. There is a minimum of 30 houses
And if the project is staged there must be at least 30 within a stage to qualify. The project or stage must be new, if it is underway there can be no underwrite.
5. There is no blanket typology preference
There can be standalone houses, duplexes, townhouses and prefabricated or relocatable dwellings also qualify. However, the houses must number 30 and be in the same development and stage to qualify.
6. The development must be almost “shovel-ready”
It needs to have resource consent and funding, although building consent is not a requirement to apply.
7. There are no Homestar certification requirements
8. Developments that contain a mixture of commercial and residential typologies can apply
However, there can only be an underwrite on the residential part.
9. There is no underwrite or set-up fee
Although there is no fee, as there might be for a private underwrite, the discount to calculate is agreed development to development. We do not currently have any insight on that and it would be a matter developers would need to keep confidential if they secure an underwrite.
10. The underwrite will be given for specific identified properties
However, it is triggered by the developer for a single property (so if some are sold it should not invalidate the underwrite on the unsold properties).
11. The underwrite will contain an agreed sunset date
So failure to achieve CCC and title by that date will cause the underwrite to fall away. That date will be agreed on a project-to-project basis.
12. If the underwrite is triggered, HUD determines what to do after settlement
These include market sales, on-sells to iwi, or other housing providers for affordable rentals or social housing.
13. The actual purchase is triggered by the developer, not HUD
If the developer can sell on the market or has sold enough to retain and market after completion, the developer does not need to trigger the underwrite and sell to the Crown.
Find out more
About the Residential Development Underwrite – visit the HUD website
If you would like to make an appointment to discuss your residential development plans, please contact us on 09 375 2770.
