Government to end quake loan scheme
Quake-prone apartment owners stunned by decision
The Government is ending a loan scheme designed to help strengthen earthquakeprone apartments, leaving owners in the lurch.
Construction work on a central Wellington building with 10 apartments was due to start in June after a 13-year struggle to make a plan.
However, the owners of four apartments were relying on a Government scheme offering low-interest deferred repayment loans of up to $250,000 to pay their share.
Roselee Thurston, who owns an apartment in the building, said the decision had gone down like a cup of sick.
“I’m really gutted to be honest because we’ve worked so hard to get to this point. The contractors are ready, the building consent is there, but being able to finance it is now under jeopardy,” Thurston said.
The total cost to strengthen her building is about $1.8 million.
“It’s like going around in a circle all the time and we felt we’d cut the circle but we’re back to being a hamster.”
Owners with pre-approval for the loan should be allowed to access the money, she said.
The Government announced yesterday it will bring forward a review of earthquake-prone building rules and extend remediation deadlines by four years.
The Herald has subsequently learned Cabinet also agreed to wind down the loan scheme and a pilot scheme providing free advice for owners to help them understand their options and collectively agree on a remediation plan.
Building and Construction Minister Chris Penk confirmed a small cohort of individuals from 10 buildings involved in the pilot assistance scheme were contacted yesterday. Building owners engaged with the loan scheme were being contacted directly by Kāinga Ora, he said.
Penk told the Herald the decision to wind down the two schemes was not related to saving requirements across the public sector: “The review . . . will consider the role of these schemes in the future as the Government looks to better manage the risk of earthquakes in New Zealand,” Penk said.
However, when Penk announced the review, he encouraged building owners to “use this time to continue to make improvements to their buildings, particularly due to the positive impacts that remediation has for insurance and their ability to get tenants”.
Labour’s Building and Construction spokeswoman Arena Williams said the decision put the risk on homeowners and councils.
“The residents who are bearing this risk are losing access to valuable support and removing the loan scheme designed to help people rebuild makes things harder for homeowners,” Williams said.
“To say the decision to wind the schemes down is separate to the 6.5 per cent cut to MBIE [the Ministry of Business, Innovation and Employment] is misdirection — we know the MBIE team doing this work has been asked to find savings.”
Owners of the Macalister Heights apartment building in Newtown will have to pay at least $180,000 each to strengthen their building.
Body corporate chair Melanie Johnston said the loan scheme was a critical piece of the compliance puzzle.
“If, after the review, we are still found to be required to strengthen, we will need something like this scheme to help get owners over the line.”
Johnston said they were surprised and disappointed to hear both schemes were ending.
“There has been a significant investment of time and energy by government agencies and earthquake-prone building owners in getting them fit for purpose. It worries us that the knowledge gained during this process might be lost for future owners.”
The loan scheme was started under the previous Labour-led Government in September 2020 with a $23m fund, yet no loans have been issued to date.
National criticised the scheme in Opposition as an “outrageous waste of money” for such a poor outcome.
An MBIE briefing from December acknowledged few owners were in a position to apply for a loan when the scheme started because coming up with a plan was complex, costly, timeconsuming and often unable to be influenced by an individual unit owner.
“Now, however, there is a significant pipeline of owners partway through the application process who are near the point of being able to receive loans under the scheme,” MBIE officials said.