Locals may soon see more homes being built across the country, thanks to a new government initiative.

Housing Minister Chris Bishop and Building and Construction Minister Chris Penk recently unveiled a programme aimed at bolstering residential construction, particularly during these tough economic times.

The Residential Development Underwrite (RDU) is designed to provide financial backing to developers, ensuring projects can move forward despite high interest rates and market uncertainty.

“We know the residential development sector is sensitive to economic fluctuations, especially given the long lead times to build homes,” Minister Bishop said.

“With borrowing costs still high and building consents low, the RDU will help developers access financing they wouldn’t otherwise have, keeping housing projects on track.”

Minister Penk also stressed the importance of the programme, stating, “This new underwrite will give the building and construction sector much-needed confidence to continue housing development during a challenging period.”

Building and Construction Minister Chris Penk.

What the Residential Development Underwrite Offers

The RDU programme works by guaranteeing that the government will purchase any unsold homes from developers after a designated sales period, providing developers with the security they need to secure loans.

To be eligible, developments must include a minimum of 30 homes, and the developers must have experience delivering projects of this size.

Other requirements include land ownership (or an option to use it), necessary consents, and proof that underwrite support is essential for the project to begin within the next 6 to 12 months.

Developers must also provide market valuations and demonstrate that they’ve made efforts to market their homes, with finance approval dependent on pre-sales.

There are no restrictions on buyer eligibility or price caps for the programme.

Housing Minister Chris Bishop.

Focus on High-Population Areas

While the RDU is available nationwide, it prioritises high-demand areas such as Auckland, Hamilton, Tauranga, Wellington, and Christchurch.

The number of homes the programme supports will depend on market demand, economic conditions, and the speed at which projects are completed and sold.

Minister Bishop emphasised that the programme is part of a larger plan to tackle New Zealand’s housing crisis.

“This is just one aspect of our efforts. We’re also pushing ahead with our Going for Housing Growth policy, which aims to increase supply by making it easier for cities to grow and develop.”

Understanding Underwrites

An underwrite provides financial security by guaranteeing that the Crown will buy homes developers cannot sell.

This assurance helps developers secure loans from banks, which typically require pre-sales before they will release financing for projects.

The RDU will be especially helpful for larger developments like apartment buildings, which have struggled in the current market.

Developers can register for the RDU starting at 10 am on Monday, 7 October.

More information, including programme details and criteria, is available on the Ministry of Housing and Urban Development’s website.