BNZ Develops New Framework to Support Home Building on Maori Land in Central Auckland

Date Published: 11 January 2024

Key Facts

• 24 homes are being built on Ngāti Whātua Ōrākei land in Central Auckland, under a new BNZ framework allowing for mortgage lending on communally owned property.
• These are the first homes to be financed using this model, which aims to simplify mortgage lending for properties built on Māori land.
• Prior to this, securing finance for housing on Māori-owned land was often challenging due to unique ownership structures and land transferability restrictions.
• BNZ provided a $20m social loan to support the construction of these homes, and has shared the framework with other banks to expand access to finance for development on Māori land across New Zealand.
• This move aligns with BNZ’s commitment to helping the Māori community and businesses prosper, and aims to create more opportunities for home ownership within the Māori population.

Article Summary

The construction of 24 homes currently underway in Central Auckland on Ngāti Whātua Ōrākei land marks an important milestone in achieving financial equity in New Zealand’s housing market. These homes are the first-of-their-kind to be financed through a new BNZ framework that facilitates mortgage lending on communal property, which mainstream banks had previously deemed too complex or risky.

In the past, the unique structure of Māori land ownership and the restrictions on the transferability of such lands often posed a financial barrier preventing Māori people from securing loans for home ownership. Alternative funding often came at high interest rates from secondary lenders. Through developing this new model, BNZ, in partnership with the iwi, is now able to offer standard home loan interest rates for these types of properties, provided that the otherwise standard home lending criteria are met.

According to BNZ, developing this solution was far from simple and required multiple years, support from Ngāti Whātua Ōrākei, and legal advice from Buddle Findlay and Russell McVeagh. The new approach applies standard leasehold mortgage lending practices and guarantees land integrity and control with the iwi in the event of a distressed mortgage. Hence, the bank’s security requirement is balanced against the everlasting land rights of the iwi.

The framework has been shared with other banks with the hope of extending its benefits across Māori organisations in New Zealand. The long-term goal of BNZ is to eliminate monopoly and foster a competitive situation that favours prospective homebuyers. The bank is also exploring its wider application on more typical rural Māori land and working on a replication model to boost home ownership and spur economic growth in smaller regions of the country where most Māori land is available.

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