Rodney Dickens likes what he has seen of the new community focus for providing social housing, aiming for a 20% share

Rodney Dickens likes what he has seen of the new community focus for providing social housing, aiming for a 20% share

By Rodney Dickens*

Rather than largely going it alone, as was the case in the past, the government is now actively encouraging community groups/trusts to get involved in the provision of housing for the low income and disadvantage (i.e. social housing).

The government will continue to play a major part in the provision of social housing via Housing Corporation that is in the process of a large building programme that goes well beyond quake-related projects.

The move to encourage community providers/trusts to play a larger part in providing social housing is one arm of the government's wide-ranging approach to try and solve the housing affordability problem that has, for example, resulted in Auckland house building running at around half the level it should have been in recent years.

At the social housing end of the spectrum the housing affordability problem has resulted in some families living in cramped and unhealthy housing.

The $139m allocated to the Social Housing Fund is the cornerstone of the government initiative and since May 2013 the Minister of Housing has announced nine new developments funded in part at least by the Social Housing Fund and involving a wide range of community social housing providers/trusts.

The largest involves a 282 dwelling development and the smallest four dwellings, with a wide range in between these two extremes and a total of just over 800 dwellings involved.

However, in some of the developments some of the dwellings will be sold as "affordable" housing to first home buyers, some will be kept as state housing, while most will be owned and/or operated by community providers/trusts or sold by them as part of rent-to-buy schemes.

There is a case for scepticism about how much taxpayer money is being used to make the developments financially feasible (i.e. money up front to fund the developments and in some cases government owned land probably being provided at a discount to market values).

I also question whether what is being described as "affordable" by the Minister of Housing is really affordable.

However, my hat goes off to the Minister of Housing and the government for the initiatives undertaken to get community providers/trusts, including iwi more involved in the provision and management of social housing because they have a much better track record.

The many community providers/trusts involved in the provision of social housing should also be applauded.

The government's motivation

The government is a major loser as a result of house prices increasing dramatically more than incomes, as has been the case in the last decade, because it means an ever growing group of people are challenged to be able to afford housing.

This hits the government in the pocket directly and gives the Minister of Housing (and the Minister of Finance) a strong incentive to fix the housing affordability problem that I have written about in the past (see here for a discussion of the "housing affordability time bomb" and here for a discussion of the affordability problem with section).

In this context the Minister of Housing is acting selfishly rather than altruistically in encouraging the involvement of community providers, but that shouldn't be held against him.

Encouraged by the housing affordability problem biting the government in the bum the Minister of Housing has stated why community providers should be more involved in the provision of social housing.

“New Zealand is out of step internationally with less than five per cent of social housing provided by the community sector, compared with nearly 20 per cent in Australia and 60 per cent in the United Kingdom." 

“International experience shows that community housing providers are better able to provide complementary services to tenants to support disabilities and families, that they do better at transitioning people to independence, they more consistently maintain the quality of their housing, and that they can stretch the taxpayer investment in social housing further. The Government’s ambition is to grow the community housing sector to provide 20 per cent of New Zealand’s social housing over the next five years."

The government's actions

Housing Minister Nick Smith & Co. have been busy in the last year delivering a range of initiatives that will help increase the role of community groups in the provision of social housing, as well as introducing some other reforms to help improve the targeting of state social housing to the needy.

Central to getting social housing developments underway is the Social Housing Fund and the Social Housing Unit that overseas what community social housing developments get funding, albeit they predate the May 2013 Budget.

The Fund is around $139m at the moment, although reference to the size of the fund differs from one at $104m and another at $141m, but $139m is the most common reference.

This link will take you to the Social Housing Unit website that spells out what community providers need to do to apply for Fund money for social housing developments.

"The Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Bill extends the provision of the income-related rent subsidy, currently only available to Housing New Zealand, to approved community social housing providers for new tenants."

This is expected to help boost the community social housing sector. 

"The Government will introduce legislation to Parliament to give community housing providers and donors certainty that assisting low-income families into home ownership will be exempt from income tax. “The Government is committed to supporting as many kiwi families as possible to achieve the goal of owning their own home. This tax change is about supporting organisations like Habitat for Humanity who help low-income families buy a house through rent-to-buy or similar home ownership products,” Housing Minister Dr Nick Smith says.

The law change is necessary after the former Charities Commission decided that while assisting low-income people with renting a house was charitable, assisting people into home ownership was not. This decision was confirmed by the High Court. One trust was deregistered and a number of others were left uncertain about their tax status, giving rise to significant anxiety in the community social housing sector." 

"More Maori will now have the opportunity to build on ancestral land after the government agreed to changes to the Kainga Whenua Loan and Kainga Whenua Infrastructure Grants this week. Associate Minister for Housing Tariana Turia says the changes allow a wider group of Maori to access loans and is another important step in advancing housing aspirations for whanau, hapu and Maori land trusts." 

“We have more than 4,000 state house tenants paying market rents, some of whom are on high incomes. This policy [reviewable tenancies] is about freeing up those homes for more needy families. Reviewable tenancies are expected to result in 1,000 tenants in 2015/16 and 2,000 tenants in 2016/17 being supported into housing independence."

In the past the tenants had permanent right of occupancy that over time resulted in 4,000 state houses being occupied by people for whom they were not intended. 

From April this year the Ministry of Social Development's "Work and Income to take on this role [managing state tenants], with offices around the country and staff who are familiar with individuals and families in need. Work and Income will carry out screening, assessment and eligibility reviews and manage the waitlist as well as referrals to housing providers. It will calculate and administer income related rent subsidies, contract and pay housing providers, investigate fraud and recover debt. A large majority of Housing New Zealand tenants, including those on the waitlist, have either current or previous involvement with MSD. In future people will avoid having to provide the same information to multiple agencies. Work and Income will not only be able to help people with their job search, income support, or superannuation but their housing needs as well." 

The community social housing projects

Since just before the May 2013 Budget the Minister of Housing had released statements about nine new social housing developments that are at least part funded by the Social Housing Fund, as well as four that relate to the opening of completed social housing developments (see http://www.beehive.govt.nz/portfolio/housing). Below I provide brief details about a number of the developments so readers can get an understanding of the sorts of results that are starting to flow or are planned as a result of the government drive to boost community social housing.

They are listed from the earliest to the most recent and links to the media releases are included.

"Housing Minister Dr. Nick Smith today announced $16.4 million of grants to support six community housing providers to complete social housing developments in Auckland, Northland, Hamilton, Bay of Plenty, Wellington, and Canterbury. This funding will support the supply of 100 new social and affordable housing units throughout New Zealand and deliver 239 bedrooms to families in need. The total value of the developments is approximately $34 million. This is the second round of grants from the Government’s $139 million Social Housing Fund. The successful providers are: Accessible Properties New Zealand Limited, Airedale Property Trust, Habitat for Humanity, Whangarei Accessible Housing Trust, the Tauranga Community Housing Trust, and one other South Island provider (pending community consultation)." 

"Housing Minister Dr. Nick Smith today announced that the Queenstown Lakes Community Housing Trust will receive a $1 million grant from the Social Housing Fund to build 10 community social housing units in Arrowtown."  

"New Zealand’s largest community housing development involving 282 social and affordable homes on surplus Government land at Weymouth in South Auckland was announced today by Housing Minister Dr Nick Smith and Auckland Mayor Len Brown. "This exciting development involves both the Government’s social and affordable housing reforms and will help 113 families into their first home. It will also expand the provision of community and social housing by 169 units,” Dr Smith says. The Government is investing $29 million from the Social Housing Fund into the $102 million development to enable the consortium led by Ngā Mana Whenua o Tāmaki Makaurau (the Tāmaki Collective), along with members of the Auckland Community Housing Network, including the New Zealand Housing Foundation, CORT Community Trust, the Auckland and Onehunga Hostel Endowment Trust, and Habitat for Humanity, to deliver 282 social and affordable homes. A Heads of Agreement has been reached and contract negotiations are expected to be completed later this month."  

"Three new social housing developments in Christchurch totaling 51 homes and an investment of $17.3 million were announced today by Housing Minister Dr. Nick Smith. The Government is partnering with The Canterbury Community Trust to help fund these developments and with community housing providers Accessible Properties, Comcare Trust and Habitat for Humanity to deliver them."

Housing Minister Dr. Nick Smith today announced a further $3.5 million of funding for community social housing provider Accessible Properties to build 20 more homes in Wellington, Tauranga and Hamilton. Dr Smith made the announcement while opening Accessible Properties latest development in Wainuiomata. The $1.2 million development has previously received $480,000 of funding from the Government’s $139 million Social Housing Fund. The new funding will allow Accessible Properties to build a further 12 homes in Wellington and four each in Tauranga and Hamilton. Accessible Properties has been a major recipient of funding in this round of grants from the Social Housing Unit. In total it has received $8.9 million of funding, with financial support also granted for the building of 13 units in Auckland and 16 in Christchurch." 

"Housing Minister Dr. Nick Smith today turned the sod to mark the beginning of construction for the Pomare mixed housing redevelopment in Lower Hutt. The project will see the construction of around 150 new homes. Up to 20 will be kept as state houses for high need families and will be a mix of one and two bedroom units and large four and five bedroom homes. Another 20 will be community social houses run through providers such as Accessible Properties and the Wellington Housing Trust. The remainder will be on-sold as low cost homes and aimed at first home buyers and large families." 

"Housing Minister Dr. Nick Smith today turned the sod to mark the beginning of construction for Housing New Zealand’s new 26 inner city apartments. The Minister also opened the first six of 45 housing units the Government has provided $4.1 million for social housing provider Comcare Trust to build. "Comcare provides an important community social housing service for vulnerable single people, most of whom have experienced mental illness or addictions. Post-earthquakes their service is more in demand than ever,” Dr Smith says."

"Housing Minister Dr. Nick Smith joined with Christchurch Mayor Lianne Dalziel and a consortium of community social housing providers today to officially unveil plans for a new 44 unit mixed social housing development in Hornby. "The $12 million Hornby Project is a collaborative partnership between the Government, Christchurch City Council, New Zealand Housing Foundation, Salvation Army, Abbeyfield Partnerships and the Housing Plus Charitable Trust. The project aims to develop an integrated neighbourhood of warm, dry and safe low-cost rental and assisted home ownership opportunities for low-income families and elderly Cantabrians," Dr Smith says." 

"Twenty-two new affordable rental houses were opened in Māngere, Auckland today by Housing Minister Dr. Nick Smith and Pacific Island Affairs Minister Peseta Sam Lotu-Iiga, as part of the Government’s programme of expanding the community housing sector. “This Matanikolo Project provides warm, dry, safe and affordable housing for 22 families who have previously been living in crowded, unstable or otherwise unsuitable accommodation. These new homes will hugely enhance the quality of life and future prospects for the 100 expected new residents,” Dr Smith says. "The particularly great thing about this development is that it is targeted at Pacific families. Our households are often larger and so we need bigger houses. Those houses tend to be more expensive and so it’s good to see that this project will be providing homes at an affordable cost for those families who really need it. The Pacific community has been closely involved with this development and that has delivered something which is right for our people,” Mr Lotu-Iiga says." 

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*Rodney Dickens is the managing director and chief research officer of Strategic Risk Analysis Limited.

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A good analysis, and I'm particularly pleased to follow the links to your 2012 Section Prices - contribution to unaffordability Rant.  My own thoughts, exactly.
 
Your earlier question bears repeating - why, in election year, aren't pollies all over the affordability issue like a rash?
 
As if yet another topical example were needed, here's today's little gem from the Press....how development contributions push developers over TLA borders....

I think I have a solution for all this yearning and churning.
1. Set up a Charity, as charity begins at home and pays no taxes in NZ, use it only for rentals to drop the bottom out of the housing market, employ craftsmen and train the next generation, let us call them, "Apprenticeships".
2. Ban all other rentals, owned by other vested interests, pollies included.
3. Ban overseas ownership, unless currently residing, or a citizen.
4. Do not sell your soul, ever again, no matter what market forces are there to tempt us all.
5. Call it "Housing Corp and Apprentice Charity Home Stay, Aussie Rules".
6. Tap up a few crony millionaires and billionaires and trillionaires for a "Charity Donation".
7. Leverage them up to the hilt.
8. Get Dot.com to set up a party theme, call it "Cloud Cuckoo Land", for a kick-starter.
9. Invite all previous associates to take part, returning all fees and royalties to the Tax Man.
10. Get A Royalty Sponsor, when next we host them at the Taxpayers expense.
(Obama doesn't travel light, include him too). 10Million to attend a meeting........these taxpayers must have deep pockets.....eh.
Cannot miss.
Remember guys, Charity begins at home....no matter what tax bracket you try to avoid.

Well, yes, Rodney understands the importance of the affordability of fringe sections. 
I don't see social housing and charitable organisations achieving much as long as the sites cost the providers of social housing as much as they are. Surely the cost of land is going to be the main problem regardless of how much charity and subsidies and State involvement you throw at it?
I don't see that there will be any downwards pressures on demand because the private sector "rest of the market" is partly crowded out thereby. 
It would all be to the good IF the land supply thing was sorted out. "Social" housing and indeed "social" master planned communities and "TOD" should be part of a package to increase urban efficiencies by means OTHER THAN blunt instrument UGB's.
Compulsory acquisitions of land would do wonders too - it is not a regulatory "taking" at all when the alternative is massive capital gains to "holdout" site owners handed monopoly powers by a "plan". It is merely the elimination of corruption. 
These things, plus targeted land taxes, road pricing, and corrrect pricing for other infrastructure use, would be a far more beneficial and less harmful way of going about the alleged objectives behind enacting UGB's. The real hidden reason UGB's and upzoning are so "popular", is the fat thousands of percent capital gains on unimproved land values created for a rentier class.