Just 25 people have lodged expressions of interest in a loan scheme which helps apartment owners pay for their building to be earthquake strengthened.
Nearly all of those who have expressed interest in the scheme are based in Wellington. Photo: 123rf.com
The scheme has now been open for more than a month, and Kāinga Ora says they expect it will take time before people are in a position to lodge an application.
But many owners fear taking on more debt.
Kāinga Ora is responsible for dishing out the Residential Earthquake Prone Building Loan Scheme, which was announced in Budget 2019.
The loan scheme offers up to $250,000 for each apartment owner.
"It is a coercive debt, that I do not need at my time of life," said Carol Brown, an apartment owner in Wellington's CBD, she lives in a building which has been deemed earthquake-prone.
"I simply do not want to take on a $200k debt, and the other thing of course is it might not even be enough."
Restrictive eligibility criteria and an 'unfair' interest rate
Geraldine Murphy, a spokesperson for Inner City Wellington - the CBD's residents' association - said debt is just one reason which explains why people might be reluctant to get on board.
She said the scheme, as it is currently, has two main flaws, which are holding people back from applying.
The first is that it does not apply to enough people. Owners who do not live in their earthquake-prone apartment are not eligible for the scheme.
And secondly, even though owners are charged interest below-market rates, Murphy is unhappy owners with a low equity in their property are being charged extra.
"I think it's unfair," she said.
"Included in the interest rate is this low equity margin. So they're adding a 1.25 percent to the total.
"We just don't agree that there should be that margin applied at all to these owners."
The chair of the Body Corporate Chairs Group, Wendy Booth, said there is another reason why not many are interested: they do not even know about it.
"I don't believe there's been enough communication or education around this for people to know, and weigh up the benefits of applying."
There are calls for councils to do more in this space - they hold the keys to the data, and so know who the scheme will apply to.
Iona Pannett - a Wellington councillor, responsible for CBD apartment resilience - told RNZ she would be following this up, and seeing what more they could do to educate people that the cash is available if they want it.
Review into loan scheme could be holding people back
There is also hope change will come with the new Minister for Building and Construction, Poto Williams.
In a statement, she said the loan scheme is one of a number of areas she will be considering.
A review of the scheme is already written in the legislation, and before the election, Grant Robertson promised to look into it.
"He believes, I think, and he's said, that the legislation needs to be reviewed with respect to multi-owner residential buildings," Murphy said.
"People might be thinking, well I'll wait to see the outcome of that, but I know that others don't want to take on debt, but I know that others just don't want to take on debt.
"And others will be flummoxed by what's going on."
Right now - those who are interested in the scheme are nearly all based in Wellington. Twenty-three out of the 25 people who have lodged an expression of interest all hailed from the capital.
Pannett said the city is ahead of others in identifying earthquake prone buildings.
"Wellingtonians have known for many years that we're a very earthquake prone city, and we've done a lot of work to identify earthquake prone buildings and issue notices, so look it is a sign of success."
No one has yet lodged a formal application for the loan.
Kāinga Ora says this is to be expected - the application requires documents like engineering reports - which come from third parties, and so inevitably takes time.
The scheme is open until 2027.
