Housing crisis: More Māori getting on property ladder on Māori land

Ngāi Te Rangi held an event in conjunction with Kiwibank about Kāinga Whenua Loans.

Contributed content

More Māori are getting on to the property ladder on Māori land held in multiple ownership, new figures show.

Since Kiwibank and Kāinga Ora launched the Kāinga Whenua Loans scheme in 2010, to February this year, 103 href="https://www.nzherald.co.nz/topic/mortgages/" target="_blank">loans have been issued and 164 houses have been built at a value of $26.9 million.

According to Kiwibank data, $13m of whenua loans were waiting to be settled to build 60 houses.

Ngāi Te Rangi chief executive Paora Stanley said any solutions to combat the housing crisis were welcome.

In his view, the rules and regulations around the effective utilisation of Māori land were “overpowering and a bureaucratic swimming pool”.

“So, anybody that puts up something like Kiwibank [has], you have to pat them on the back and say thank you.”

Tauranga was one of the most expensive places to buy a whare (house) in New Zealand and that made it difficult for local Māori to get on the property ladder.

Being able to build on Māori land made the process cheaper and more achievable, and it opened up opportunities, Stanley said.

‘Worth the journey’

Demand for a recent Ngāi Te Rangi, Āhei Te Whare Hapai workshop, held in conjunction with Kiwibank representatives about Kāinga Whenua Loans, exceeded expectations and had to be capped at 24 attendees.

Some of the key preparation messages from Tauranga Kiwibank branch manager Michelle Palmer were: “Create good financial habits, be mindful of spending, clear your debt and have licence to occupy.”

She told whānau contemplating applying for a Kāinga Whenua Loan that achieving those goals first would help get their ducks in a row.

Palmer said the loan process would not happen overnight due to the complexities involved in securing a licence to occupy multiply owned Māori land.

“But it is well worth the journey. Building on whenua is special as you know it’s been gifted down through the generations. It’s for our kids so there is more meaning, it can’t be sold and it’s protected.

“You’ll also end up with a lower mortgage than if you were trying to buy a residential house.”

No mortgage on the land

Kiwibank mobile mortgage manager Donna Neville said unlike a traditional loan, the bank did not register its interest on the title of the property, but Kāinga Ora did on the home.

Neville said there was no mortgage on the land and she gave the audience a broad overview of how the process worked.

Some of those steps included considering the benefits and risks, an eligibility assessment, support from other owners of the land block, the design of the new home or transportable home, council consents, loan approval and a Māori Land Court licence to occupy that meets Kāinga Ora Security requirements.

No deposit was required for loans under $200,000 while 5% was needed for every dollar borrowed above that.

KiwiSaver could also be accessed to use in conjunction with a Kāinga Whenua Loan in most instances, she said.

Questions from the floor

During the kōrero, Neville and other representatives fielded an array of questions from those who attended the event.

Q: Can the money for council building consents etc be calculated into the loan?

A: No, council consents are not loanable.

Q: What type of home can you get a loan on?

A: It can be any type of housing, including a transportable home, as long as it meets Kāinga Ora requirements such as it is built on piles and is a minimum of 50sq m.

Q: What are some of the fish hooks?

A: If you’re a couple and you’ve both got KiwiSaver that you want to use, if one of those people isn’t on the licence to occupy, that can sometimes present challenges.

Q: What is the interest rate on the loans?

A: With building, we normally start construction on a variable rate and you only pay the interest during the building process. You can fix the loan when the building is complete.

Q: Can I rent out the house?

A: No, you have to live in it, especially if you have used your Kiwisaver.

Q: Are there restrictions on the loan if you want to build off the grid, including solar?

There are no restrictions around that.

Q: How far will the bank go back on your statements when applying for the loan?

A: Typically, six months so if you’ve got debt like a car loan, afterpays, credit cards, personal loans, it is best to minimise those before you apply. They can really limit what you can borrow.

Q: Is there an income cap for Kāinga Whenua Loans?

A: No, but there is a realisable asset criteria.

Q: Can transport costs of a transportable home be worked into the loan?

A: Yes.

Q: Can you get a Kāinga Whenua Loan for Matakana Island?

A: No, the loans only cover the mainland so the North and South Island[s].

Hoping ‘dream’ will become reality

Roy Matthews has whenua land and just needs a loan to build on it.

He said it would mean the world for his whānau and now he was going to start putting things into action.

“It would give our kids security and is our dream. Now we are just making sure our financial position is ready for this process.

“We will probably be looking at building a four- or five-bedroom home.”

Henare Luatua (from left), Dion Adams and Marama Willams listened with interest about the Kāinga Whenua Loans scheme.

Henare Luatua hoped to “get the ball rolling” and was full of enthusiasm at the conclusion of the Kāinga Whenua Loans session.

“All of my questions were answered with yes ... I’ve wanted to move back to Tauranga for ages. Now this is actually going to be possible and it is a good opportunity.”

Marama Willams said she was interested in “getting more knowledge around what is accessible to us in terms of finance”.

“It was absolutely helpful and I took away some great tips.”

Roy Matthews (left) and Tiria Maunder want to build a house on Māori land.

No defaults on Kāinga Whenua Loans

Kāinga Ora home ownership products manager Jason Lovell said the organisation had made key changes to Kāinga Whenua Loan criteria to provide more choice and opportunities for whānau accessing the loan for housing on multiply owned Māori land.

Some of those included the removal of the loan cap so the size of the loan was approved on the basis of what the applicant could afford, and the loan criteria had been expanded to support relocatable and offsite-manufactured homes.

There had been no defaults on Kāinga Whenua Loans to date, Lovell said.

However, Kiwibank and Kāinga Ora would work with borrowers to avoid this.

“In the event of a default, Kāinga Ora would work through a process to remove the house off the whenua and sell it,” Lovell said.

“The whenua would remain in the hands of the landowners, and the borrower would need to work with Kāinga Ora to repay any outstanding amounts that could not be repaid from the sale of the house.”

Carmen Hall is a communications advisor for Te Rūnanga o Ngāi Te Rangi Iwi Trust and a former Bay of Plenty Times journalist.