Just three loans have been given conditional eligibility approval from a $23 million fund to help owners of earthquake-risk apartments.
National’s building and construction spokesman, Andrew Bayly, said the fund was an “outrageous waste of money” for such a poor outcome.
The Government scheme opened to applications for individual loans of up to $250,000 more than two years ago.
It was primarily designed for owners at risk of losing their homes due to financial hardship from large earthquake-strengthening bills, many of whom are in Wellington.
Written parliamentary questions by Bayly reveal one application, which was previously declined, was granted conditional approval only after the scheme’s eligibility criteria were widened in May.
About $1000 has been spent on marketing and promoting the scheme, which included targeted mail-outs and flyers to apartment owners via Wellington City Council.
As of October, almost $1m had been spent on administration costs.
But Kāinga Ora, the scheme’s administrator, has received 56 expressions of interest from potential applicants.
Many of these people are getting themselves borrower ready, meaning they can provide all the documentation required for an application.
Kāinga Ora understood five potential applicants might be ready to make applications over the course of the next year. Three potential applicants have achieved conditional eligibility approval, which is the first part of the two-part application process.
Bayly said he was disappointed the scheme has had such little impact.
“When taxpayers ask where all the money has gone that the Labour Government has said they have spent on worthwhile schemes, this is the value they are obtaining.
“It is an outrageous waste of money for such a poor outcome. Meanwhile, owners continue to live with the uncertainty and fear that their house may not be strong enough to withstand the next earthquake.”
Ministry of Business, Innovation and Employment (MBIE) building policy manager Amy Moorhead said the scheme represented value to potential applicants facing the challenging task of earthquake strengthening.
“The process of remediating an earthquake-prone building with multiple owners is extremely complex and time-consuming, as such many owners of apartments or units in these buildings are still working through the decision-making process to determine how to remediate their buildings and do not yet require the loans to be paid out.”
This was the main reason no applications have been fully completed, Moorhead said.
“The success of the scheme shouldn’t be measured by the number of loans issued, or the amount of money loaned, but by the number of people it offers support to by removing the barrier of genuine financial hardship, allowing them to remain in their own home,” she said.
Kāinga Ora was working with those who have expressed interest and proactively checked in with those who had previously expressed interest but have not progressed through the process, Moorhead said.
She said Kāinga Ora was in a good position to administer the scheme in a cost-effective way since it already had staff and expertise in administering the likes of the First Home Grant and First Home Loan, she said.
Some apartment owners have seen earthquake strengthening as too difficult and have decided to sell up instead.
Michael Cummins is one of many across Wellington who have faced sleepless nights, losing their home, and being on the brink of “financial disaster”.
It was going to cost more than $400,000 to earthquake-strengthen his share of the apartment building he lived in on Kent Tce, effectively “wiping out” his retirement plan.
Since the Herald first reported on his case in 2020, the apartment owners in the building decided to sell, with the exception of one owner.
Cummins said they got a realistic and reasonable price for the apartment.
“It was a very big relief when we were finally able to walk away from that.”
Cummins said they loved their apartment, but the pressure and uncertainty meant strengthening the building wasn’t an option for them.