The Government is already negotiating to buy “several hundred” units off property developers as part of its Kiwibuild programme.

Housing Minister, Phil Twyford, has given  POLITIK that estimate of current progress on the programme.

He said the Ministry of Building, Innovation and Employment (MBIE) has spent the last two months talking to developers about providing housing for the Kiwibuild programme.

But what is clear from what Twyford says is that there is no actual specific Kiwibuild construction as distinct from Housing New Zealand developments likely to happen immediately.

Instead, the Government will be purchasing from already planned developments which have become “stranded” because the banks have tightened up on lending.

In effect, the Government will be using its financial clout to assist struggling property developers.

This is despite claims in Parliament yesterday from Twyford  that the Government would  “build 100,000 homes for first-home buyers by 2028.”

When Tywford uses the word “build” what he really means is that the Government will “facilitate the building of.”

“We’ve spent the Last two months talking to developers about buying off the plans,” Twyford told POLITIK.

“The tender documents have been out for a week and a half now, and the response has been fantastic.


“The Kiwibuild team at MBIE are going flat out now talking to developers about particular sites.

“We’ve already had several hundred units that developers want to talk to us about buying off the plans.”

Twyford said they were mostly in Auckland but not confined solely to Auckland.

He said that the big Kiwibuild development projects, like the Unitec project in Auckland, which the Government would do itself, would take a “bit longer” to come on stream.

Twyford says that in the first couple of years much of the volume of Kiwibuild will come from buying off the plans rather than the Government actually building new houses.

“Buying off the plans is designed to de-risk and speed up developments that are currently not happening because of the shortage of liquidity,” he said.

“So it’s not just – let’s say – 30% of the development that are Kiwibuild units; the entire development will be speeded up.

“There are dozens of developments that are stranded at the moment because of the lack of liquidity.”

So under the buying-off –the-plans policy, developers will be able to approach the bank with 30% of their development underwritten or pre-sold and Twyford says that should be enough to get their finance over the line.

But how does the Government ensure that the policy does not become a licence to bail out struggling property developers?

Speaking to her weekly media conference on Monday, the Prime Minister, Jacinda Ardern, said the Crown would be exercising the same caution it would when it entered into any kind of commercial arrangement.

“There is a difference to a bailout from a developer who otherwise would not be able to produce what is otherwise a sound development because of some of the changes  banks have made around their lending.”

It is going to be hard, though, for the Government to not have this decision portrayed as an industry assistance programme for property developers.

Labour’s election manifesto strongly promoted the idea that an Affordable Housing Authority would manage the construction of Kiwibuild homes.

“The Affordable Housing Authority will be the primary delivery mechanism for KiwiBuild homes, building them as part of its development projects,” the manifesto said.

So far there is no sign of the authority.

And what is also clear is that for the first two years, apart from Housing New Zealand housing, the Government is unlikely to be building any new houses itself.

Twyford went even further in Parliament yesterday, suggesting that the 100,000 Kiwibuild homes would  “deliver up to $11 billion in additional residential construction over the next four years.”

That comment appears consistent with the new Government line; that Kiwibuild is releasing investment from the private sector that would otherwise not have happened.