Residential Development Underwrite

The Residential Development Underwrite (RDU) is a new, time-limited initiative. It was introduced to help the residential construction sector return from the effects of the downturn.

The underwrite will act as the pre-sales needed for developers to secure bank finance for consented, costed and ready-to-commence projects.

It will help maintain capacity in the sector, help grow housing supply and support developments to be ready for when buyers return to the market.

Making an application 

Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development invites applications from experienced developers who need an underwrite to maintain construction pipelines for residential developments. The underwrite must be low risk and cost to the Crown.

Your application should include the required templates, and organisation and development-specific documents outlined in the developers information document. The templates and documents can be found at the bottom of this page.

Submit your application(external link)

About the Residential Development Underwrite

The RDU aims to support developments that deliver housing relative to the local market demand, with low risk of the underwrite being triggered. This means developments must have good financial feasibility, reasonable developer equity input, and be in locations where buyers want to purchase. 

Developments that deliver the most homes for the least risk and cost to the Crown will be prioritised. Developments in the main centres (Auckland, Hamilton, Tauranga, Wellington and Christchurch) are likely to best meet RDU objectives. However, developments in other locations that meet the full criteria may also be considered.

Eligibility criteria

HUD will only accept applications that meet all of the eligibility criteria.

The developer must:

  • be an established residential developer with a proven track record of successfully building and selling houses of a similar size and scale
  • have ownership or use of the land (or an option to do so) and have all required resource consents for residential housing
  • provide satisfactory evidence underwrites are needed for the development to proceed within 6 - 12 months (for example, evidence that reasonable attempts have been made to market the development, finance approval is conditional on securing presales, and there are workers/subcontractors available)
  • agree to provide a recent market valuation from a registered valuer.

The development must:

  • have a minimum of 30 houses. If the development is to be staged, the stage subject to the underwrite must have a minimum of 30 houses.

Assessment framework

The assessment framework will help HUD progress proposals which best align with the RDU’s objectives.  You should self-assess your proposal against this framework and the detailed description for each criteria. In each of the criteria below, all information will be assessed for the likelihood that an underwrite may be triggered.

# Criteria Description
1 Risk and net cost to the Crown (35%)
  • Evidence and assessment of the development feasibility
  • Commercial and risk assessment of the developer’s proposed underwrite discount relative to market value of the houses
  • Commercial and risk assessment of the proportion of houses in the development or stage that the developer has applied to be underwritten
  • Commercial and risk assessment of the average price of the underwritten houses 
  • Commercial and risk assessment of the developer’s submitted case studies (examples of previous completed developments) with a particular focus on the sales risk of the developments
  • Level of developer equity contributed to the development 
  • Commercial and risk assessment of the volume of presales already achieved
2 Project Readiness (25%)
  • Level of confidence in the development programme
  • Evidence of development finance availability 
  • How fast can construction commence 
  • How soon will houses be delivered to the market, relative to the nature of the development (house type)
  • Evidence the developer has the internal key personnel with appropriate skills, experience and availability to successfully complete the development
  • Evidence that the progress to contract contractors is in alignment with programme timeframes
3 Volume and nature of supply (20%)
  • Total volume of houses in the development or applicable stage
  • Evidence of market demand for the typology and design
  • Assessment of the type of housing either apartments, townhouses/terraces or standalone dwellings
  • Predominant typology
4 Location (20%)
  • Evidence and assessment of the purchaser capacity to purchase houses when completed
  • Evidence and assessment of the current undersupply of housing within the location
  • Evidence and assessment of the population growth within the location
  • Evidence and assessment of the future decline in housing developments 
  • Assessment of location proximity to amenities and transport

Information for developers 

The information below will help developers decide if their development meets the RDU criteria.

  1. Information document (including terms and conditions) (PDF, 379 KB)
  2. Frequently asked questions (PDF, 255 KB)

Documents to support your application 

Completed templates must be attached to all applications. A full list of all documents required to support a developer’s application can be found in the information document above.

  1. Developer profile (DOCX, 1.2 MB)
  2. Key contractors’ information  (DOCX, 1.2 MB)
  3. Development feasibility (XLSX, 135 KB)
  4. Dwelling schedule (XLSX, 62 KB)

Once you've completed the required documents, you can submit your application here(external link)

Contact

Please email RDU@hud.govt.nz for any additional information or if you have any questions you would like to submit in advance for the webinar.