Trust plans to reduce section costs
A new trust set up to develop low-cost sections for red-zone evacuees believes it could sell them for up to $80,000 below market value.
The Canterbury Co-operative Land Trust, which has the backing of Burwood-Pegasus city councillor Glenn Livingstone, hopes to encourage up to 1000 residential red-zone homeowners to take part in co-operative land developments.
Residents have expressed concerns about the Government's offer to buy their homes for their 2007 rateable value, saying it will not cover the cost of buying a new section.
Livingstone said the trust wanted to ensure that earthquake-hit residents could afford to buy a new home.
"A lot of people aren't in a position to take on an extra mortgage," he said.
The trust would bring red-zone residents together to jointly buy land and develop it into sections.
Property developer and trustee Grant MacKinnon said selling all the sections before developing the land would cut out the developer's margin and sales and marketing costs, which could account for up to 40 per cent of a section's value.
Livingstone said the sections could be sold for between $90,000 and $120,000, depending on their location.
Chartered accountant and trustee Simon White said the trust had spoken to the Canterbury Earthquake Recovery Authority, the Christchurch City Council and residents' associations about its plans.
"We've had a lot of support. Everyone we talk to says that what we're trying to do is a good idea," he said.
The trust hoped to encourage up to 1000 red-zone homeowners to take part.
"It's not going to appeal to all 6000 [red-zone homeowners], but if whatever we do can make a difference, that's the main thing," he said.
Homeowners who registered their initial interest were not committed to taking part in a development.
White said trustees were working on a voluntary basis, while a project manager and law firm would receive small fees only if the developments went ahead.
The trust was also willing to assist other groups that wanted to work on their own co-operative developments.
MacKinnon said the trust was looking for suitable land throughout the city and could develop sections within 12 to 18 months if everything went to plan.
Real Estate Institute of New Zealand Canterbury spokesman Tony McPherson said the proposal could help homeowners whose red-zoned properties were smaller than most currently on the market.
"Clearly there are a number of people who can't really afford the costs of lots of sections designed for the pre-earthquake market, and you have to think quite broadly to meet the needs of those people."
He said the co-operative approach was likely to save money for participants as it reduced risk for developers.
"The hardest thing for a developer is going out, looking at the high cost of developing and wondering how their sections are going to sell and what is going to happen to section prices in this market."
He did not believe developers were making the high profit margins outlined by the trust, but could not comment on the likely savings on section prices until the details of a specific project were decided.
Anyone planning to take part in the scheme should speak to a legal adviser about what they were signing up to, he said.
For more information on the trust or to register interest, visit canterburyaffordablesections.org.nz.