INL May 15, 2020 Digital Edition

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04 MAY 15, 2020 Homelink Non-Bank development finance in post Covid-19 environment Parash Sarma The Covid-19 outbreak will continue to cause significant adverse economic effects that will almost inevitably impair borrowers’ abilities to obtain and service mortgages and other financing. And unlike the mainstream banks, which can access new Zealand Reserve Bank liquidity and funding support, non-bank lenders have limited tools to combat economic shocks. Billion dollar initiatives to encourage lenders to provide cash flow support to small business have emerged, but they have not Winter Energy Payment to benefit 850,000 Carmel Sepuloni More than one million New Zealanders will have more to spend on warmer homes today as the Government’s doubling of the Winter Energy Payment kicks in to keep people well and stimulate the economy. brought salvation for all sectors of the market. In particular, the Non-Bank sector will be feeling pain as wholesale funders and investors reduce their risk appetites and, in some instances, pull funding altogether. A different model The model for ASAP Finance is different- it is a family-owned business and private equity is supported by fixed-term funding lines from mainstream banks. This means, we do not rely on wholesale funders or investors which provides us with cashflow certainty. However, there are other sector specific risks which all developers should consider when choosing their funding partner. On an ongoing basis, development finance companies have an added layer of complexity when it comes to managing cashflow. Development funding requires lenders to make progress payments to the developer/or contractor generally on a monthly basis for completed works. During the Global Financial Crisis (GFC), many developers were caught out when their financier failed to make those progress payments ultimately spelling disaster for their project. This is because development finance companies rely on recycled cashflow from mortgage repayments to fund progress payments. Mortgage repayments issue Mortgage repayments can come from selling down completed stock once the project is complete, or by way of refinance once the construction risk has eliminated. During times of crisis, low The Winter Energy Payment for 2020 runs for 22 weeks from May 1 to October 1, 2020 and doubles to $1400 for couples and $900 for single people this year. About 850,000 people will benefit from it with more than one million kept warmer once children and other household members of recipients are included. The Winter Energy Payment started as part of the Government’s December 2017 Families Package designed to help older New Zealanders and many of our poorest families heat their homes over winter. When the impact of Covid-19 first hit, the Government set out a $12.1 billion dollar support package for New Zealanders and business. It was within this package that we increased benefits by $25 and doubled the Winter Energy Payment. A core part of the Government’s response to Covid-19 is to ensure families stay healthy and focused on their wellbeing which is good transaction volumes decrease the frequency of repayments; similarly the refinance market experiences a decline in liquidity as other lenders become less willing to take on new debt. Simple strategies such as switching from loan origination to servicing existing clients can provide immediate cashflow relief during times of crises and could be considered best practice for even the most well capitalised development lenders. The Catch-22 being that it decreases overall liquidity in the economy and can ultimately worsen the impact of a crises. At ASAP Finance, we endured the Global Financial Crises and are aware of the perils that can result from being unprepared for external shocks. We emerged strongly from the GFC and the lessons learned continue to be implemented in the business today including always operating with sufficient margin of safety. Over the past two weeks, we have visited over 80 construction sites with more sites to be visited over the coming weeks. Our commitment to our clients during these time remains unchanged; our success is inextricably linked to the success our clients. Parash Sharma is Client Services Director at ASAP Property Finance Specialists based in Auckland. Phone 021-864730. Email: parash@asapfinance.co.nz for them and good for our health service. Those on lower incomes generally spend any extra money on household items that keep their families well, and so doubling the Winter Energy Payment will act as an immediate stimulus in local economies. The increase to main benefits, in addition to the benefit rate being indexed to the net average wage rather than the Consumer Price Index, is the largest across-theboard increase in several decades and is estimated to help support 350,000 low-income individuals and families. The efforts of our team of five million helped to get us in a good position to tackle the virus and we each continue to have a role to play as we begin to reboot our economy for the good of all New Zealanders. The Government is here to support those who need it. Carmel Sepuloni is Minister for Social Development. Smart money choices made simple. We’ll help you find the sweetest mortgage deal whether it’s your first home or investment property, and arrange the best insurance to suit your needs. Mortgage services Home loans Construction loans Refinances and restructures Top ups & debt consolidation Commercial & Business loans Insurance Life, Trauma Medical/Health General Business Income Protection Call us today 0800 21 22 23 Level 1, 3/53 Cavendish Drive Manukau
MAY 15, 2020 Restrictions reflect Water crisis in Auckland Phil Goff After seven weeks in lockdown, it is good to have greater freedom that the move to Alert Level 2 brings us. It is good too for the businesses that will now be able to reopen. But with freedom comes responsibility. We still need to observe the physical distancing and heightened focus on hygiene that we have learned over recent months. And we need, all of us, to avoid reckless behaviour that might increase the risk of transmitting Covid-19. South Korea, Germany examples The risk at Level 2 is much higher, as we have seen from countries that managed containment of the disease better than most, like the Republic of Korea and Germany. In both countries there has been a spike in new cases as restrictions have been eased. Here in New Zealand, with a few exceptions, people have cooperated and been responsible, which has helped us succeed in containing the virus to a low number of cases and people needing to be hospitalised. We have, according to health experts, saved hundreds of lives and stopped our hospital system from being overwhelmed, as hospital systems have been in Europe and the United States. Care and Caution By exercising proper care, we can go about life in a more normal fashion and embark on the big challenge ahead, which is achieving economic recovery after the huge losses incurred by lockdown and by the international recession. At Alert Level 2, most businesses will be able to reopen with physical distancing and health and safety provisions in place. Remote working is still encouraged where it is an option, and people at higher risk of severe illness are encouraged to stay home as much as possible. People are still advised to avoid non-essential travel out of their home region and are encouraged to stay local. Re-opening facilities At Auckland Council, we continue to follow the advice of the government and health authorities, and we will notify you of which Council facilities will reopen as soon as the updated guidelines are confirmed. While the Covid-19 pandemic has been dominating the news, Auckland Council has also been responding to the growing challenge of the ongoing drought, which is set to become the most severe in our history. Since the start of the year, Auckland has received only 36% of its usual rainfall, and total water storage in our dams has fallen to less than 46%, significantly lower than the 76% average. Recent rainfall in May has been welcome, but has made little difference to overall supply, with weeks of heavy rain required to bring us back to normal levels. Mandatory water restrictions To ensure that we can maintain our water supply if the drought continues, we have introduced mandatory water restrictions that will come into force from Saturday, May 16, 2020. These restrictions initially ban the use of outdoor hoses and water-blasters. They will place strong restrictions on the watering of sports fields, plants or paddocks, and require car washes to operate only if they use recyclable water. Further restrictions will be implemented if our water storage levels continue to fall. Please continue to save water where possible elsewhere, by keeping showers brief and using dishwashers and washing machines only when they are full. Visit watercare.co.nz for more information about how you can save water. Phil Goff is Mayor of Auckland. He writes a weekly column in Indian Newslink. Homelink 05 CLASSES START 18 MAY Shape your future, bring your ideas to life, and make a difference. We’ve got a range of full and part-time study options starting now. It’s not too late to apply. Put your plans in place and get the skills you need to secure your future. Don’t miss out. Apply now. manukau.ac.nz MKT245_5h1
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INL May 15, 2020 Digital Edition

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