A Christchurch City Council initiated housing scheme that was supposed to help Christchurch families into their first home has failed.
In 2019, the Council granted approval for Habitat for Humanity to operate the Initiative.
The Council’s PR department said “families struggling to get onto the Christchurch property ladder could soon get an extra helping hand.”
The Council and the Government each contributed $3.07m. $320,000 has been used on investigative, advisory and associated legal fees.
But the scheme has now been put on hold.
Council Head of Strategic Policy Emma Davis said “these costs arose from firstly attempting to establish a shared equity loan model, which proved insurmountable given unforeseen regulatory compliance issues with the Credit Contracts and Consumer Finance Act. This route was ceased in May 2020 given that an exemption to the Act would have been required.”
“This was also found to be too lengthy and costly to carry out in the current environment given the specific documentation for the Initiative that would be required for satisfying the banking and legal sectors. This avenue has not been pursued since May 2021.”
Habitat for Humanity general manager Stephen Roach said “there were significant regulatory issues identified when the Initiative was originally conceived of as a shared equity loan scheme:
“Amending the Initiative to a shared equity ownership model has since posed challenges in developing the required documentation to the satisfaction of mortgage lenders. As a result, Council stopped pursuing these avenues as they were taking too long.”
When asked if the council did due diligence on the scheme? Mr Roach said “Council would be best placed to answer this one.”
Mr Roach said “we have regularly communicated with the families about the status of the scheme, including an email sent just yesterday to both the eight families selected for the pilot and the remaining families on the waiting list, apologising for any distress caused.”
“We’re frustrated for them all and very disappointed that we could not further their aspirations of home ownership through the CHI scheme.”
“However, Council staff are presenting a recommendation to Council by mid-September to use the remaining funds on a proposed development on their land in Carey Street involving several community housing providers. It is hoped that this may provide a further opportunity for the ‘CHI’ families.”
Christchurch City Councillor Sam MacDonald said “so far legal fees and advisors, and an unquantified amount of Council staff time has been used on this project, and it appears to have not helped a single person into a home. Ratepayers will quite rightly be asking how on earth this happened, it feels a bit like Kiwibuild.”
Emma Davis said “our aim is still to enable home ownership by modest-income families not supported by other schemes.”