A West Auckland homeowner says he’s been told to consider social housing as he faces financial ruin once he’s sold his home to the council through the buyout scheme.
After saving for seven years, Alex Young bought his first home in 2021 at the height of the market.
When the market dipped he went into negative equity, but Young said that wasn’t a problem until his home flooded on Auckland Anniversary Weekend last year.
It’s been assigned Category 3 – deemed unsafe to stay – meaning he is eligible for a buyout.
However, he said it’s an offer he can’t accept.
“I’ll be left with approximately $100,000 worth of debt,” Young told 1News.
The Auckland Council Recovery Office’s natural and built environment lead, Craig Hobbs, said there are limited options.
“We can’t be all things to all people,” Hobbs said. “We’ve got stretched funding.”
Because Young is insured, Auckland Council will pay him up to 95% of his property’s value just before the floods hit.
However, it won’t account for the outstanding balance on his mortgage, and he has been told there is no extra compensation on the table.
“The intent of the response to the floods was really to enable people to walk away from properties that face intolerable risk of flooding without losing the shirts on their backs,” said Te Atatū MP Phil Twyford, who’s been advocating for flood-affected residents in negative equity.
“They are losing the shirts on their back.”
Twyford said CoreLogic numbers indicated fewer than 30 homeowners across Auckland are likely in this position.
“Auckland Council could very tightly define this group of people around the negative equity in their property and then limit their liability.”
Hobbs said work is underway on the local and national level to find a solution.
“People should approach their bank and have a one-on-one conversation if they’re in a position that is, you know, awkward,” he said.
“But there are conversations going on at a political level around how can we support.”
Emergency Management and Recovery Minster Mark Mitchell said it was a local council issue.
“I do sympathise with those who may be facing negative equity situations,” he told 1News in a statement.
“Councils are responsible for setting the detailed policies it will apply to the voluntary buyouts of Category 3 residential properties.”
The New Zealand Banking Association said banks have “dedicated hardship teams who can talk through available options”.
“My bank has been trying to help,” Young said, “but the thing is they’re also confused, equally confused, by the situation.”
Twyford said homeowners in negative equity were feeling forced to accept a buyout offer, even if it left them in debt.
“They cannot stay, they cannot get insurance, they cannot sell – they’re locked into this.”
