"Some flexibility around eligibility should be considered in limited circumstances to accommodate these situations", the review said.
But the review also said any changes to the scheme's settings alone would only result in a "small number" of unit owners being supported to comply with their remediation requirements.
"There are wider barriers that make it challenging for people to remediate their buildings in general – the remediation process is complex, time-consuming, costly, and requires joint decision-making across groups of owners."
MBIE has confirmed Cabinet agreed to some changes yesterday to widen access to the scheme. To date no one has applied for the scheme, but the ministry has received 45 expressions of interest.
The changes include allowing some people who no longer live in their earthquake-prone units to make use of the loans, on the condition they either sell their property or move back into it within two years of the building being removed from the Earthquake-Prone Building Register.
The scheme was previously only available to owner-occupiers to limit the transfer of wealth from taxpayers to private property owners.
But the review found some previous owner-occupiers were being classified as investors after having to move out of their units due to a change in circumstances like a job, divorce, or the mental strain from the earthquake-strengthening process.
"They are not traditional investors as they do not own another property, and selling their residential earthquake-prone building unit with outstanding remediation obligations is not possible.
"They do receive rental income from their apartments, as the rental market for earthquake-prone units has been less affected than the market to sell."
The review also noted that while many wanted to sell their units, some real estate agents refused to take the listing or could only sell at a price that would result in significant financial hardship.
Building and Construction Minister Poto Williams said she was pleased the changes will give more building owners an avenue to remediate their homes to a higher safety level.
"The changes will also make the scheme easier to access and will ensure support reaches the people who need it."
Williams said she would be closely monitoring the uptake of the scheme to ensure it is achieving its intent.
MBIE has also started on a broader programme of work to consider what further support can be provided to owners to address the wider barriers to remediating their buildings.
Another change to the scheme Cabinet has agreed to is expanding the cut-off date for the scheme's eligibility from July 1, 2017.
This is the date the new national system for managing earthquake-prone buildings came into effect.
When the scheme was designed, it was assumed that owners purchasing units after this date would be fully aware of potential earthquake-prone building remediation requirements.
But the review found one respondent whose apartment building was initially assessed as being 83 per cent of the New Building Standard (NBS) and some owners purchased their units after July 2017 on this premise.
Anything less than 34 per cent NBS is considered earthquake-prone.
Then, while addressing deferred maintenance in 2021, the building was reassessed by an engineer who rated it as being less than 15 per cent NBS.
"The current settings exclude the owners who purchased their apartments in this building and did not know at the time of purchase that the building would later be confirmed as earthquake-prone", the review said.
Other changes agreed to include requiring all loans be secured by full insurance where possible, but when full cover is not feasible, a loan may be granted where the building has fire cover and where strengthening will bring the building to an insurable level.
Consumer credit reports will no longer be required to access the scheme.
The interest rate has been adjusted to 50 per cent of the Reserve Bank's monthly average of five-year fixed interest rate, and the 1.25 per cent low-equity margin has been removed.
The changes will come into effect from May 18, 2022.
