Few apartment owners show interest in earthquake boost loan program
Only 25 people have expressed interest in a loan program that helps apartment owners pay to have their building strengthened against the earthquake.
The program has now been open for over a month, and Kāinga Ora says they expect it to be some time before people are able to apply.
But many owners fear of getting into more debt.
Kāinga Ora is responsible for setting up the Earthquake Prone Residential Construction Loan Program, which was announced in the 2019 budget.
The loan program offers up to $ 250,000 for each apartment owner.
“It’s a coercive debt, which I don’t need in my time of life,” said Carol Brown, an apartment owner in Wellington’s CBD, she lives in a building that has been found to be prone to tremors. earthen.
“I just don’t want to take on $ 200,000 in debt, and the other thing, of course, is that it might not even be enough.”
Restrictive eligibility criteria and “unfair” interest rate
Geraldine Murphy, spokesperson for Inner City Wellington – the CBD Residents Association – said debt is only one reason which is why people might be reluctant to get on board.
She said the program, as it is now, has two main flaws, which prevent people from applying.
The first is that it does not apply to a sufficient number of people. Homeowners who do not live in their earthquake-prone apartment are not eligible for the program.
And second, even though homeowners pay interest below market rates, Murphy is unhappy that homeowners with low equity in their property are being charged extra.
“I think it’s unfair,” she said.
“That low equity margin is included in the interest rate. So they add 1.25% to the total.
“We just don’t agree that this margin should be applied to these owners.”
Body Corporate Chairs Group President Wendy Booth said there’s another reason not many people are interested – they don’t even know it.
“I don’t think there has been enough communication or education about this for people to know and assess the benefits of applying.”
There are calls for the councils to do more in this space – they hold the keys to the data and therefore know who the program will apply to.
Iona Pannett – a Wellington advisor responsible for CBD Apartment Resilience – told RNZ she will follow this up and see what more they can do to let people know the money is available if they want to. .
Loan program review could hold people back
There is also hope that change will come with the new Minister of Building and Construction, Poto Williams.
In a statement, she said the loan program is one of many areas she will consider.
A review of the regime is already enshrined in legislation and ahead of the election Grant Robertson has promised to review it.
“He thinks, I think, and he has said so, that the legislation needs to be reviewed when it comes to multi-owner residential properties,” Murphy said.
“People might think, well, I’ll wait and see the result, but I know others don’t want to get into debt, but I know others just don’t want to get into debt.
“And others will be baffled by what is going on.”
At present, those interested in the program are almost all based in Wellington. Twenty-three of the 25 people who submitted an expression of interest are all from the capital.
Pannett said the city was ahead of the crowd in identifying buildings prone to earthquakes.
“Wellingtonians have known for many years that we are a very earthquake prone city, and we have done a lot of work identifying earthquake prone buildings and posting notices, so look, this is a sign of success.”
No one has yet filed a formal loan application.
Kāinga Ora says that’s to be expected – the request requires documents such as engineering reports – which come from third parties and therefore inevitably take time.
The program is open until 2027.