APIA warns investors of tighter loan conditions – advisers should prepare clients early
Mortgage advisers with construction and development clients may need to prepare early, as banks and insurers are expected to tighten requirements ahead of the government’s building consent reform in 2026.
The reform will replace joint liability with proportionate liability, introduce mandatory warranties and insurance, and streamline consent authorities – changes likely to affect both lending practices and project finance.
Sarina Gibbon (pictured), general manager of the Auckland Property Investors Association (APIA), said lenders will start changing their credit policies long before Parliament passes anything.
“Do not wait for the bill to pass,” Gibbon said. “Banks will want to see that your project is protected well before the law changes. They are not in the business of lending into uncertainty.”
Banks price risk in real time
The reforms, which will introduce proportionate liability and stronger insurance obligations, are designed to reduce systemic risk in construction. But as Gibbon noted, lenders act as if new obligations are already in place once the government signals reform.
For mortgage advisers, this means tighter scrutiny of investor and developer applications.
Banks are expected to ask for:
- Proof of warranty cover or indemnity insurance
- Evidence of contractor solvency, track record, and insurance
- Detailed contracts, inspection records, and risk assessments
- Clear risk cover before funds are released, with weaker projects facing higher costs or refusal
“This is the same pattern seen in Australia,” Gibbon said. “Banks demanded cover and documentation years before regulators enforced anything. New Zealand lenders will follow suit.”
What mortgage advisers should do now
Mortgage advisers can help their clients stay ahead by encouraging them to:
- Talk to lenders early about protections they will expect over the next 12 months
- Build warranty and insurance costs into feasibility models
- Prepare contractors to provide the paperwork banks will require
- Keep records sharp and accessible, as strong documentation speeds up approval
“Investors who wait until banks change their credit policy will be on the back foot,” Gibbon said. “The smart move is to prepare now. If you can show your project is covered, financed, and documented, you will be ahead of the market.”
Competitive advantage for prepared clients
The transition will be uneven. Some investors and developers may struggle to meet new demands, while others who move early will secure faster approvals and a stronger competitive position.
For mortgage advisers, the message is clear: construction and development finance will be judged by tomorrow’s rules, not today’s law. Being proactive will protect access to funding and keep clients’ projects moving.
Check out the APIA insights here.
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