New funding lines coming for housing developers, Chris Bishop says
Minister of Housing Chris Bishop. Photo / Sylvie Whinray
- Housing Minister Chris Bishop announced the Greenfield Model, providing low-cost financing for housing developments.
- The scheme involves NIFFco lending to a Special Purpose Vehicle, with costs repaid by home owners via a levy.
- Bishop also announced scrapping LUC-3 land protections, consulting on special agriculture zones to balance housing and food supply.
Housing Minister Chris Bishop has announced a new funding line for housing developments that will ultimately be repaid by home owners through an annual levy.
Bishop says the development phase of a project is the riskiest and private financiers reflect this by charging higher interest rates.
The new scheme, called the Greenfield Model, would see the Government’s National Infrastructure and Financing Agency (NIFFco) lend to a Special Purpose Vehicle (SPV) at a “very competitive” interest rate during the early stage of development.
The debt would then be refinanced to private markets, such as a bank, once the development is complete. It would ultimately be repaid by the new home owners via a levy.
“NIFFCo’s loan will provide lower-cost financing to developers over the development period by charging approximately what private financiers would charge for completed developments,” Bishop said.
“This support will bridge the financing gap and help ensure that new homes continue to be built in areas where they are needed most.”
Bishop said funding for the Greenfield Model would come from unallocated funding within NIFFco. Capital could be recycled into new projects after the five- to seven-year development period.
On Wednesday, Bishop also announced that the Government would scrap the “LUC-3″ land protections. The National Policy Statement on Highly Productive Land (NPS-HPL) protects productive soil areas from development to ensure the country has a secure food supply, he said.
Fifteen per cent of country’s landmass falls under the NPS-HPL. There are three classifications with two-thirds being classified as LUC-3, the lowest quality, Bishop says.
“To ensure we have got the balance between protecting our food supply and enabling more houses to be built, alongside this change we are going to consult on whether we should establish ‘special agriculture zones’.
“These would essentially protect LUC 1, 2 and 3 land when it is grouped together in a natural configuration in key horticultural horticulture hubs like Horowhenua or Pukekohe.”
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.