No takers for $23m quake-prone apartment scheme
No-one has applied for a $23 million Government loan scheme intended to help struggling apartment owners in earthquake-prone buildings, 16 months after it was launched.
But residents’ groups say the uncertainty of costs and limited criteria make the scheme impossible to access.
The Residential EarthquakeProne Building Financial Assistance Scheme, which was launched in September 2020, has received 44 expressions of interest and zero applications to date.
The scheme allows owneroccupiers of units and apartments in earthquake-prone buildings to apply for up to $250,000 in low-interest loans for earthquake strengthening.
The Government allocated $23.3m to the initiative in the 2019
Budget and has spent $578,857 to establish the scheme and promote it.
Earthquake-prone apartment buildings have been a major concern for owners and prospective buyers turned off by risks and insurance costs. They’re also a roadblock for the Government’s hopes to encourage more urban density and apartment living.
The issues are especially evident in Wellington, where there are 561 buildings, including units and apartments, registered as earthquake-prone. One survey of apartment owners in the city estimated the average cost of repairs was close to $500,000 per owner.
Building and Construction Minister Poto Williams said the Ministry of Business, Innovation and Employment was reviewing the scheme, with changes set to be decided later this year.
‘‘When the Financial Assistance Scheme was launched, Cabinet agreed it should be reviewed 12 months later,’’ she said.
‘‘The 12-month period has allowed MBIE to gain valuable insights into the barriers preventing applications to the scheme and an analysis of its take-up is a key part of that review.
‘‘The review includes recommendations for some changes which could improve access to the scheme and these are currently under consideration.’’
Any changes to the scheme would need to be approved by
Cabinet and would be announced later this year.
Geraldine Murphy, of InnerCity Wellington, a group that represents the city’s urban residents, said the scheme’s eligibility criteria should be changed immediately, rather than waiting for an extended review.
‘‘That’s so wrong. There’s millions sitting there waiting for people to apply, but unless they change this people won’t be able to apply.’’
National MP Andrew Bayly said the scheme was not financially attractive for owners, and the criteria to access it was too limited.
Loans were available for those who owned and occupied their apartment, and only for units bought before July 2017. The loans were capped at $250,000 and people had to prove they couldn’t get a loan from a bank, or that doing so would cause significant financial hardship.
Bayly said the Government should expand the scheme significantly, with more total funding, a higher borrowing limit, and make it available to investors as well as owner-operators.
‘‘I think there should be debt forgiveness, provided they also put up some money. And there’ll be others who just want to have access to cash during a period of financial stress, and can pay it back over a long period of time,’’ he said.
Inner-City Wellington has long been asking for changes to laws related to earthquake-prone buildings, claiming the rules were ‘‘fundamentally flawed’’ when it came to multi-owner residential buildings.
A report by the group found it was ‘‘impossible’’ for apartment owners to comply with the existing earthquake-prone building legislation without incurring financial losses averaging $400,000.