4. KiwiBuild—Buying off the PlansHon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban DevelopmentKiwiBuild—Buying off the Plans4. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban Development: Has he been advised of the quantum of risk that the Crown is taking through its Buying off the Plans initiative; if so what is the quantum of risk?Hon PHIL TWYFORD (Minister of Housing and Urban Development): The types and amount of risk the Crown may take through the Buying off the Plans initiative were assessed as part of the business case I took to Cabinet. In terms of the amount of risk that will depend on the particular contractual arrangements between each developer and the Crown. Hon Judith Collins: Once the Crown has committed to a KiwiBuild Buying off the Plans purchase from a developer will the Crown take all of the risk if the housing market falls and if not in what proportion will that risk be taken? Hon PHIL TWYFORD: Well the nature of the risk-sharing arrangement in the Buying off the Plans initiative centres on the underwriting or Buying off the Plans itself. In that case—in the case of an underwrite—if the developer is unable to sell the property at an agreed price then the Crown will step in and buy that property at an agreed price and then onsell it to young Kiwi families. Hon Judith Collins: If the construction risks such as a rise in construction costs lie with the developer who will take on the risk if the houses are not completed by the developer? Hon PHIL TWYFORD: That risk is one that is shared by the developer and KiwiBuild and it will be dealt with through the contractual negotiations. Hon Judith Collins: If the developer becomes insolvent during the process of building the KiwiBuild houses will the Crown meet the mortgage debts of the developer and what is the limit of liability in relation to each development that he is prepared to take? Hon PHIL TWYFORD: I don't have that precise detail in front of me but if the member wants to put down a written question I'll be very happy to do my best to answer it. Hon Judith Collins: If Hawkins Construction and other formerly major and credible developers have gone into liquidation this year then what assurance can he give New Zealanders that other developers will not leave the New Zealand taxpayer liable for meeting the costs of unmet guarantees in half-built houses?Hon PHIL TWYFORD: What I would say to that is that risk is an inherent part of the development process. The whole idea behind KiwiBuild is that the Government will prudently share the risk with developers in order to build the kinds of modest affordable starter homes that the market has absolutely failed to deliver to young Kiwi first-home buyers. That is the nature of the risk-sharing arrangement that lies at the heart of KiwiBuild. Marja Lubeck: What are the risks of not undertaking the Buying off the Plans KiwiBuild programme?Hon PHIL TWYFORD: The main risk is that we will continue to see residential developments across New Zealand stall because developers struggle to find finance on acceptable terms. These developments will not be built will be completed more slowly and will contain bigger more expensive homes because that's where the biggest profit margin lies. This would mean that we would not increase the supply of modern starter homes for young families. This Government is committed to building affordable homes so that we can restore the Kiwi Dream of affordable homeownership.