Key details wider social housing reforms, including selling up to 2,000 state houses in coming year; more social housing subsidies

Key details wider social housing reforms, including selling up to 2,000 state houses in coming year; more social housing subsidies
State houses/Lynn Grieveson/Hive News

By Bernard Hickey

Prime Minister John Key has unveiled plans to sell 1,000 to 2,000 state houses in the next year to community housing groups and Iwi in an effort to expand the number of social houses without having to invest more taxpayer capital.

Key unveiled the extension of the Government's social housing reforms in his State of the Nation address, including plans for an extra 3,000 reviews of existing Housing New Zealand tenants already paying market rents to see if they can move into the private rental market or buy their own homes.

The Government has over the last two years reformed the way Housing New Zealand assesses tenants and created Income Related Rent subsidies that are open to community groups such as Salvation Army and Presbyterian Support Services to apply and help fund the building of new homes. Community housing groups currently own 5,000 homes and have talked up plans to build another 15,000 by 2020.

Key said the Government planned to increase the number of Income Related Rent subsidies by around 3,000 places to 65,000 places by 2017/18 at an extra cost of NZ$40 million a year. The Government also planned to reduce its number of Housing New Zealand properties to 60,000 by 2016/17, Key said. Housing New Zealand currently has about 68,000 homes, including 3,000 leased homes.

Key reiterated that Housing New Zealand would remain the largest provider of social housing, but that the Government aimed to increase the involvement of community groups, as had happened in Britain and Australia where up to 30% of homes were provided by the non-government sector.

"The experience of countries like Australia and the United Kingdom is that having non-government organisations involved in social housing, alongside the government, is a better way of doing things," Key said.

Key said the Government was taking a cautious approach and would review the sales in November this year. He compared the 1,000 to 2,000 sales with the current sales programme by Housing NZ of 600 to 700 a year to first home buyers, rental property owners and developers.

He said the Government would require community housing providers to keep any ex Housing NZ homes in social housing.

The Government would shortly offer an initial 300 income related rent subsidies to community housing providers, Key said.

It would also make a NZ$500,000 cash injection for emergency housing, alongside a wider review of funding and the creation of an Auckland emergency housing database.

The Government planned a strategic review of Housing New Zealand over the first half of the year, Key added.

Some of Housing NZ's homes and land could be transferred out into a special urban development authority.

Key cited the Tamaki Redevelopment Company, which is a partnership between the Government and Auckland Council. However, he noted in a later news conference development of the project had been slow.

"Again, we want to accelerate these processes, so small and large redevelopments of Housing New Zealand land and properties are undertaken with more urgency," Key said.

"The Government is still considering how and where that might happen. A large redevelopment could involve existing properties being transferred out of Housing New Zealand ownership and into a special urban development entity," he said.

Reaction cautious

However, the reaction from community housing groups was lukewarm.

Salvation Army Spokeswoman Sue Hay said community housing groups wanted more details about the state house sales.

"There's no detail on how the transfers would happen and at what price," Hay said.

She said the sector was also disappointed at the lack of an increase in the Government's fund for capital grants for social housing providers from the existing NZ$139 million.

Key gave no detail about the levels of discounts and Social Housing Minister Paula Bennett confirmed the Government had looked at increasing the capital fund, but had decided against it. Bennett also confirmed the Government was still working on the details of resolving the tax-free status of many social housing charities, despite the passsing of a law last year.

Hay said community housing groups were still waiting on the resolution of the tax-free status, which had been up in the air for nearly four years after a Charities Commission ruling against such housing groups and a High Court ruling confirming that ruling.

Community Housing Aotearoa Director Scott Figenshow welcomed the Government's announcements as a step in the right direction, but that it had not gone far enough. He said he was disappointed the Government had not earmarked all the proceeds for recycling into social housing and had not confirmed the length of contract period for community housing organisations, which he said was an essential detail for raising finance.

“What we want to see was some form of long-term contract arrangement which provides security for community housing organisations to go and borrow money to build that house for that tenant with the income-related rent subsidy," Figenshow said.

“This is a good start, but we need the government to be more ambitious. The government is clearly making social housing a priority but more action is needed."

'Window dressing for move to vouchers'

Labour Housing Spokesman Phil Twyford described the numbers detailed by Key as reasonably modest and the Prime Minister's rhetoric as cautious. Previous reports had suggested the Government could sell up to 20,000 homes.

"If Nick Smith had been running the policy you could have added a number with a factor of 10," Twyford said. "Key avoided all the language of the market," he said.

Twyford described the Government's moves to involve community housing groups as "window dressing" on an ideologically driven move to introduce vouchers that delivered taxpayer subsidies to private landlords while getting the state out of owning houses.

He doubted the community housing sector would be able to buy state houses and build new ones to the scale the Government wanted, given continued uncertainty about capital funding and the sector's tax status.

Twyford also challenged Key's characterisation of the larger moves towards non-Government owned social housing in Britain and Australia.

"The result has been longer waiting lists, higher rents and more squalor and poverty," he said.

New Zealand First leader Winston Peters said moving people from one state-owned landlord to a state subsidised landlord was not solving a housing crisis.

“The answer to the long waiting lists, high house prices and rents is to build homes. Mr Key continues to deliberately miss the point. Beloved of the National Party is the market. The market in New Zealand is a dramatic lack of supply against highly inflated demand," Peters said.

Green Party Co-Leader Metiria Turei described the plan as a fire sale that would line the pockets of landlords and developers, while driving up rents and reducing the security of vulnerable families.

“John Key’s speech on the future of so called “social housing” today was a pie in the sky wish list of maybes, that didn’t show a coherent plan for the building of a single new home, ” Turei said.

“John Key is skirting around the simple truth - selling thousands of state homes will never lead to more people being housed unless more homes are being built to replace them - and I don’t see a concrete plan to make that happen," she said.

See my preview of the speech here and the full speech is here.

(Updated with more details/reaction)

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What's a place, Bernard? Is it like "come to my place for tea"or is it a placement for one person?

Where are the 2,000 houses they are going to sell? If Auckland, this could help ease the housing shortage - it will just leave a shortage of 38,000 houses.. If in the regions, bad news for property owners there.

You'll find he actually said they will sell 1,000-2,000 homes to community groups over the next year.  The number being sold to the public was not specified.
 
Key's best statement was that they don't have a monopoly on good ideas... I'd say they don't have any good ideas.
 
What we will see here is instead of the inner band of quite well built state houses in the fringe central Auckland suburbs being sold to private individuals, we will have bureaucrats with harebrained "green" and "high density" schemes pulling down liveable houses and replacing them with cheaply built dense slums which are still state owned or community owned and make the rest of the suburb remain grotty and prevent the natural expansion of the inner Auckland prime suburbs.
 
Auckland needs a game changer, it needs those state housing suburbs to be the next Ponsonby and Grey Lynn, the only way to achieve that is to sell those suburbs such as Mt Albert, Mt Roskill, Glen Innes to private home owners who will renovate them and turn the bigger sites into more of leafy suburbs Aucklanders desire with only modest low density infill.  These could become the des res address for the young upwardly mobile.
 
What we know will happen instead is the same crappy developments occurring.  The perfect example is the slum also known as Rowena Crescent in Glen Innes, a state housing redevelopment only a decade or so old.  That is what these suburbs are destined to become.  An absolute disaster for Auckland and Auckland house prices in nice suburbs will go ever skyward.

I can see Nat's property Investors dribbling in anticipation as scooping up these houses, tearing them down and building some McMansions for the forigen buyers http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1139...

Oh for goodness sake Frazz , the Nat Government cant fart without the lunatic fringe becoming hysterical .
John Key did not say anywhere that he was selling state houses to Investors .
What he did say was that the State would be sharing the burden of housing the poor and indigent with community groups , instead of the whole burden falling on the hapless taxpayer .
I would also have liked a house to rent with the rent limited to 25% of my salary back in the day my Mortgage was 50% of my wage and at one stage it was nealry 60% .
Frankly , we need to realise that the nanny State cannot house everyone for free or almost for free , and the only altenative is to get community groups involved

Lunatic Fringe!! Bollacks, but great to see your old boomer views typed out once again. National just keep pulling up the ladder as they go...."Given hundreds of reviews have so far produced just 32 tenants who have either bought their own homes or moved on to private rentals, there is no guarantee the process will in the short term achieve much ... ".
Read more Kumbel  I say.
 

Boatman: can you see that it all comes doen to the systemic affordability of the market?
Far less NEED for social housing or "accommodation supplement" if you have a median multiple of 3, and dare I say it, the sub-$100,000 housing that is usually available in such markets. Inflation always hits the bottom of the market hardest. Houses that should be $100,000 become $350,000 - $1,000,000.
Houses that should be $3,000,000 become $4,000,000. This is far less harmful to the buyers of such housing, than the inflation that happens to the $100,000 houses is for the buyers or potential buyers at the bottom of the market now locked out of the market completely.
In the UK, since they enacted their insane urban growth rationing racket in 1947, they had urban land rent diverging higher and higher away from where it shoulfd have been if you used countries that were about on the same level in the 1930's, and by 1974 fully 1/3 of the population was in social housing.
Of course many of our lefty, statist politicians and advocates salivate at ths prospect - they are incapable of seeing that "running out of other people's money" is the inevitable result. As Maggie Thatcher said when whe proceeded to sell that social housing off.  It is a tragedy that she did not take her axe to the urban planning system as well as everything else she did. The pain of Thatcherite reforms has landed on the workers and employers and the gains have fallen to the rentier class in property and finance.
 
 

They have that problem with governance in Canada.
It's got to the point where it's getting impossible to do anything because someone is going to be ticked off and want to oppose it.

Here's the relevant bits of the speech with some translations out of "Politician" into "Reality":
 
Next steps in social housing
One of the biggest and most longstanding issues is the supply of new housing, particularly in Auckland.
Previous governments have put this in the too-hard basket.
[And that would include the 2008-11 and 2011-14 governments]
 
Last week, Nick Smith outlined significant changes to the Resource Management Act to improve the supply and affordability of housing.
[Very little informed opinion would agree with you on that, John]
 
Already you can see signs that our approach is working.
Residential construction increased 21 per cent last year and more than 24,000 building consents were issued – the highest number since 2008.
[Of which only 7,669 were for Auckland. A large % of the Auckland dwelling consents were for apartments including units in retirement villages. 7,157 consents were issued for dwellings in Canterbury a region 30% the size of Auckland]
 
This growth in construction is set to continue as special housing areas accelerate land availability and consenting.
[Developers in Auckland have already said building cannot accelerate until Auckland Council gets on with rolling out vital infrastructure to the SHA’s]
 
That will help to ease the pressure on house prices.
[Not until the 40,000 - 50,000 dwelling backlog in AKL required to house existing residents properly is cleared]
 
But we should also recognise that housing affordability includes more than just prices.
Incomes have been rising faster than inflation and people are feeling confident about the future.
[Who cares? The middle household in Auckland still has to find 8.2 times their annual income to buy the middle house. If house prices stay exactly as they are in nominal terms it will still take 60-70 years for the ratio between prices and income to narrow to an acceptable level.]
 
Interest rates are low, which makes servicing a mortgage easier.
[No it just lets people bid house prices higher when there aren’t enough houses on the market. Their actual payments stay the same]
 
These factors are actually supporting the growth in house prices in some areas. People are assessing their own ability to pay and are bidding on that basis, as they’ve always done.
[That’s for sure. Home ownership rates have declined from 73% in AKL to 65% over the last 20 years. The 112,000 people who might have been living in their own home 20 years ago are now lining up for places in tax- and rate- payer subsidised housing]
 
It’s often hard, though, to save for your first house.
[$100,000 off a combined gross income of less than $75,000? Yep that’s hard]
 
That’s where the Government’s new HomeStart programme for first home buyers comes in. It begins in April this year and we estimate it will help 90,000 people into their first home over the next five years.
 [Or just bid bottom quintile housing stock up higher - no net benefit to anyone]
 
[ A lot of discussion of social housing follows which can be summarised as follows:
We couldn’t care less about Auckland’s lower-middle and middle class]
 
That’s what I can promise New Zealand. [Auckland]
 
[That's one helluva promise, John]
 
 

You are going to get yourself on the undesirable list with comments like that Kumbel.  You will need to be booked in for reprogaming.

Next time I'm in my bach in Hawaii I probably won't get invited over for a barbie with Everyman and Obama. I accept that.

Its a long way on crutches, and those 5 year passports were made with people like you in mind.

Kumbel, you are a jewel!!

Very kind, thank you.
 
I am giving a big hat tip to Statistics NZ. Pretty much all of the data I use comes from them. Auckland Council were also very kind being honest in their appraisal of the housing situation in 2012 which gives us good baseline data.
 
I am a relatively recent convert to the affordable housing camp and I am heartened when I see more and more people, the influential and the more humble commenters like ourselves, starting to understand how bad the situation really is.
 
People should also understand that this issue is apolitical. The people who care about housing affordability come from every shade of the political spectrum and we find the inertia of  all the political parties shameful.

We are seeing more and more road-to-Damascus type conversions on this issue, and Kumbel, you are indeed a formidable addition to the team of Apostles.
Another analogy I might use, is the Emperor's New Clothes. Gradually the cry is being taken up by more and more people, still few in number, but..... the facts are there under everyone's noses. 
Bear in mind that Stephen Berry got 20,000-odd votes in the Auckland Mayoralty contest, and that is a lot of people to have won over basically by social media campaigning. The mainstream media ignores us, they are in with the dark side on this. They gave Minto wall-to-wall sympathetic coverage and he came 2 places behind the unknown Stephen Berry (who was 3rd after Brown and Palino).

One of the main reasons for the popularity of blogs and online independent media -is- the lack of political spin.

No matter how many New Year's Resolutions are made to be "more positive" the real draw will be for accurate information.   And since much of the time "news" is risk-conspicious (it's the bad news we need to be warned about) it tends to sound negative.  And that is why I get rather concerned about public media bulletins.... too many times it's a repeat of a poorly performed misdirection.    Real investors need to know real machanics and real situations.
Sales and business always comes down to relationships (relationships with people with money).   With no trust what kind of business are you running.  You're not going to stay in business without trust.   Slowly but surely people will drift away from scream sheets designed to sell them advertisements, to somewhere that they can trust opinions, examine motive, and the advertising is valuable to them because of that trust.

Auckland is not New Zealand, I wouldn't want to live in the rat-race with all the rats, and nobody has a gun to anybody's head forcing them to live there.  If you want to live there, thats your choice, stop crying about it.  $100 will buy you a house in cash, in some parts of NZ, or a good deposit on a very, very nice house. 
If people acted rationally, instead of grizzling and playing a suckers game, this would be a non issue.

financial career gun.   Just cause you don't know the caliber don't mean it isn't present.

Yep I could get a bargain in Gore or Westport, I could even buy the whole town of Otira. So what?
 
When employers shift from Auckland and offer jobs in other locations people will follow them out of Auckland.
 
But even that is not the main point. There are cities all over the world that are growing faster than Auckland, attracting employers and creating large homes for workers at $200K. 
 
We have cocked it up all over the country not just Auckland (which is why the employers aren't moving). So yes we are talking about Auckland today but Christchurch is not much better and every other place is another Auckland in the making.

Well I don't think unemployment is actually lower then the rest of NZ so I'm not sure of your point, other districts and cities are growing faster in NZ.  People want to live in Auckland, and they want to pay high prices for housing, good for them.  If they can afford it (which obviously they can) then thats great, go for it.  If you don't like it, then a more pragmatic approach then whineing would be moving. 
 

The last unemployment stats (Q3-14) by region are ...
 
Auckland ....... 6.0% vs 6.7% a year ago
Wellington ..... 5.6% vs 6.0%
Canterbury .... 3.2% vs 4.2%
 
North Is ......... 6.2% vs 6.8%
South Is ......... 3.4% vs 4.4%
 
New Zealand   5.4% vs 6.2%
 

That is very interesting, I'm surprised at how low South Is is.  Pretty much overfull employment.  Opportunities there for aspiring Aucklanders I'm sure.

Um... one of the reasons employment in the Sth Island is lower is that people are moving to Auckland. Ironically, probably for jobs.
 
Of course Canterbury skews the stats anyway. In some industries the only qualification you need to get a job in the rebuild is being able to breathe.

Really Kumbel ?   ".... one of the reasons employment in the Sth Island is lower is that people are moving to Auckland. Ironically, probably for jobs...."

Really don't have the actual stats at my fingertips but south to north internal migration is hardly news.
 
Auckland grew by 33,000 from 2013 to 2014. This growth came from 3 sources:
 

  • natural increase about 10,000
  • inwards long-term migration - Auckland's share last year around 13000 but probably more as lots were students
  • internal migration the rest - anywhere between 6000 and 10,000

 
When you look at population growth for the last ten years its pretty anemic in the Sth ISland apart from the Amberley-Ashburton corridor. In the North Island the story is not flash between Hamilton and Wellington. The coloured pictures tell me that people are piling into first Auckland-Hamilton, then Greater Christchurch at the expense of the rest of the country.
 

They took the EQC payout and put it into the Auckland property market. 
It's more likely to be to the benefit of the rest of the country, more work available, cheaper cost of living, where is the cost? 

Going by your previous logic employers have moved out of Auckland, and in theory people should be following them for the jobs.  If I had a house in Auckland I could probably sell it, buy a nice house in South Is with enough change for a batch in the Sounds (or at one of the lakes) and a boat!

IT companies I used to work for had that problem.
People would move to cities where the offices were, then they would get promoted internally which meant Wellington or Christchurch.  Then if they were career minded they either cross employers or go to Auckland. Then once in Auckland, jumpt os ome big payer.

A few of the exec's used to complain they were just the training centers for their Auckland competitors...

Thanks for the real data Mr Chaston.   Such simple facts blow the assumptions of some Auckland centric interest.co commentators right out of the water.

Many people above the age of 16 who don't have employment or businesses don't show up on unemployment filters.
 

Officially Auckland is the 6th fastest growing "district" in NZ beaten only by a handful of genuine districts and Tauranga City. I'm pretty sure that growth rate is a statistical abberation due to the cancellation of the 2011 census but that's what it is.
 
 

Updated with more details and reaction
cheers
Bernard

Christchurch intensification has failed. Hornby is the new CBD.
Massive brand new flash Farmers trading store just got in. 
Free parking versus expensive city parking.
No need to go to old CBD now. It is a hole with two or three new commercial buildings going up to the West of the Avon river. ( An area not controlled by CERA or CCDU;)
 
The govt has destroyed what was left of former central area.
Avon River Loop Anchor project is an abject failure.
 
CCDU want to destroy the lovely terraced tree rich Victoria Square and put boring flat turfed area themed with Maori carvings and native bush.
 
Could the planners stuff it up anymore?
 
If it aint broke...
 
 

sick of the maori stuff.  lets have some non-racial art

Hornby?? Maybe Addington could pass as a new CBD, probably not Hornby though.

Having lived/owned just off the main drag in Addington (in the old town area) for several years pre-and post earthquake, I can attest to the fact that Addington is very much a candidate for new CBD.

What was once a nice quiet, family freindly neighbourhood quickly turned into streets littered with beer bottles and trash, piss and spew stained doorways, assaults, stolen cars (mine included), boy racers yahooing and music thumping through the night.

All the things you'd expect from a happening urban CDB.....
I took close to a $100,000 hit just to get my family the f#$% out of there and out to a nice quiet street in Burnside.
 

Eric Crampton contributed a chapter to a book on ChCh recently, which he titled "The Plan Against the Rebuilding of Christchurch". 

Is that book, Once in a lifetime: City-building after disaster in Christchurch?
If so, I just ordered a copy. Looking forward to reading it.   

Govt gives another gift to property investors/banks.  Now instead of govt keeping the revenues, PI's can use WINZ payments to pay off a mortgage. 

show maths

Instead of govt owning houses for WINZ beneficiaries, I now own the house, the rent now goes to me, not the govt, I use the rent to pay the mortgage.  How is that hard to understand?

Why are we going down this social housing track at all.   If there is to be a big government effort, why not have a campaign to return to mass home ownership with all the economic, and social benefits that would provide.
A bunch of organisations who pretend to be charities (social housing providers) will be rubbing their hands with glee.   (While maintaining a sober concerned face)