RESIDENTIAL DEVELOPMENT RESPONSE FUND
Government’s new building stimulus package aims to maintain construction momentum and reduce the economic impact of Covid-19
A $350m Residential Development Response Fund has been announced by the Government. Housing Minister Dr Megan Woods announced the fund to support the residential construction sector and to minimise the economic impact from Covid-19.
“The Residential Development Response Fund will help progress stalled or at-risk developments that support our broader housing objectives, such as ensuring the supply of affordable housing and providing jobs,” said Dr Woods.
Formed in response to a possible tightening of available bank finance for residential housing projects following Covid-19, the new fund is in part a broadening of the KiwiBuild scheme, loosening the requirements developers must meet in order to receive underwriting support. For example, financial support can be sought midway through a project, rather than just at the start.
“As we saw following the Global Financial Crisis, when house building halved between 2008 and 2011, credit can be harder to access in uncertain economic times. We know from talking to the building sector there is a relatively solid pipeline of construction activity until the end the year, but the outlook beyond that is unclear.
“Providing assurance through the fund will ensure developers can keep building homes, and workers employed. It’s estimated the fund will maintain around 15,000 jobs and the building of around 4,000 new homes, that otherwise might not be built because of barriers to developers securing finance,” Dr Woods said.
$250m will come from KiwiBuild budget and $100m will come from the Covid-19 Response and Recovery Fund.