Flood-impacted property owner fears further losses

Five months on from the Auckland Anniversary floods, many Kiwis have not yet returned to their homes as they negotiate with insurers and wait on remedial work to be completed.

This includes people whose family homes have been impacted, and those who own rental properties that are unable to be re-rented.

Meanwhile, the mortgage still needs to be paid, and the five New Zealand banks say that they have a range of options to help their customers to meet their mortgage repayments.

Speaking with NZ Adviser upon the condition of anonymity, the owner of a rental property in central Auckland said that during this year’s Anniversary Weekend floods, the waterline on his property reached the window sills.

His property was initially red-stickered by Auckland Council, which was then changed to a yellow sticker and following liaison with the council, has since been removed. Following completion of a drying process which included removal of gib board, the property owner was still in discussion with his insurance company over a disparity about the scope of work and what needed to be done to remediate. 

“They said that their person could do the repair job for $170,000 and so that’s all they’ll pay me if I wanted a cash settlement, where I have got builders myself telling me it’s in the $300,000 mark,” the property owner told NZ Adviser.

Meanwhile the property sits vacant: there is no rental income until a resolution is reached and repairs are complete.

As an added complication, the property was up for sale when the heavy rainfall hit, the property due to go to auction the week after. While there had since been interest from buyers, however the homeowner said that what they were willing to pay (plus the settlement) constituted around a $200,000 shortfall.

Many property owners were likely to be grappling with bigger costs and concerns, particularly those in other hard-hit areas who have high levels of borrowing (particularly those with over 80% LVR), he said.

It is now a waiting game for repairs to be agreed and completed,  but in the meantime the costs of property ownership continue.

The owner’s  mortgage protection insurance policy covers his repayments for up to 40 weeks (capped at $40,000). 

“My rent is at $1,015 so I’ll be going through that quite quickly … there’s [less than] $16,000 to go so I don’t think my home is going to be reinstated in 16 weeks,” he said.

The property owner said that he expected to need to dip more into his savings and income after his insurance runs out, noting that he hadn’t yet discussed his options with his bank.

As banks and insurers have a financial interest in helping to protect homeowners, they have the opportunity to work together to assist impacted customers as a collective group, he said.

Banks provide support to impacted customers

NZ Adviser contacted the five main banks to ask what forms of support they are providing to property owners affected by the severe weather events.

Westpac NZ general manager of consumer banking and wealth Mike Norfolk said that the bank encouraged customers concerned about their ability to service their home loan (including those with a rental property loan) to talk to the bank early, noting that “a variety of potential options are available”.

“Customers who qualify for financial hardship assistance may be able to restructure their loan, reduce their loan repayments for a period of time or access other options,” Norfolk said.

More broadly, Westpac committed $1 million in donations to community groups and mayoral relief funds supporting the recovery in areas hit by severe weather. The bank also provided a $3 million flood relief fund for affected small businesses and agri-customers, he said.

An ANZ spokesperson said that the bank had already supported many customers with relief – options included interest-free overdrafts where there was an urgent requirement for funds, moving a portion of their lending to interest-only repayments, extending the term of their loan or looking at payment relief options.

In recent months, ANZ had reached out to some customers in recent months who were showing signs of needing extra support and had bolstered its customer financial wellbeing team to support customers moving forward.

“If customers haven’t yet contacted the bank but do have concerns regarding a rental property or owner-occupied property, we would strongly encourage them to get in contact with us as soon as possible,” the ANZ spokesperson said.

“Often the earlier we know about a situation, the more assistance options we have available.”

An ASB spokesperson said that the bank had a dedicated financial assistance team to support customers impacted by severe weather events, offering custom solutions to fit each situation.

“For ASB customers residing at a red or yellow-stickered property, we offered ex-gratia payments of $2,000 NZD as immediate support, and we have also supported customers with both owner-occupied and non-owner occupied properties with a loan holiday or principal relief, where needed,” the ASB spokesperson said.

“We remain in close contact with these customers to determine the level of ongoing support required.”

Kiwibank said that customers impacted by the Anniversary Weekend floods or Cyclone Gabrielle who needed assistance were encouraged to reach out.

Interest-only repayments for up to one year, repayment deferrals for up to three months and extension of the loan repayment term were examples of the types of assistance the bank had provided to home loan customers. 

“Together we will work through their individual circumstances to determine the appropriate form of assistance,” the Kiwibank spokesperson said.

Kiwibank said that it proactively contacted customers nearing the end of their assistance period to ensure they were ready to return to regular repayments, working through additional support if required.

BNZ general manager customer assist Martin King said that following the upper North Island floods and Cyclone Gabrielle, BNZ acted quickly to support customers and communities in urgent need, tailoring a range of support options.

Options included temporary overdrafts at 0% interest, deferral options for home loan repayments and $1 billion in low cost lending to help affected businesses get back on their feet.

“We know that the recovery period can extend long after the initial clean-up, especially for those dealing with red or yellow-stickered properties,” King said. “Our Customer Assist team works directly with affected customers to understand their unique situations and develop a personalised plan to help them get back on their feet.”

“This may include reducing or deferring home loan repayments or switching to interest-only payments for a period, depending on the customer’s situation.”

In situations where rental properties have been damaged and cannot be tenanted, King said that BNZ could extend similar assistance measures, tailoring solutions to customers’ individual needs.