Govt halts state housing sales

Property

Housing Minister says 2500 Christchurch state houses due to be sold by mid next year will now be retained

20th Dec 17, 1:21pm by David Hargreaves

The coalition Government has cancelled the sell-off of state houses, which was another of its first 100 day promises.

Housing and Urban Development Minister Phil Twyford said the move would stop the transfer of up to 2500 state houses in Christchurch.

He made the announcement in a state housing area in Miramar, Wellington. The announcement was also attended by Prime Minister Jacinda Ardern.

"Tenants in the suburbs of Shirley, Bryndwr and Riccarton had been told they were likely to have a new landlord by mid next year," Twyford said.

"This week they will receive letters telling them their homes will not be sold.

"I’m pleased these families will be able to enjoy Christmas without the uncertainty this sale would create."

Twyford said that community housing providers have an important role to play in housing those in need, "but the first and last provider of public housing must be the state".

“This Government is committed to not only keeping these houses within state ownership, but increasing the number of state houses. And a modernisation programme by Housing NZ will mean more dry, warm and healthy state houses.

“While this is the end of large-scale state housing sell-offs, Housing NZ will be rejuvenating its stock by building and buying newer homes where they are most needed and selling houses that are no longer fit for purpose.

“Sales to renew and grow the stock are quite different from the systematic large-scale sales used by the previous government to reduce the role of Housing NZ.

“Large-scale sales of state houses during a housing crisis do nothing to help house our most vulnerable people,” Twyford said.

The latest announcement follows on from Twyford announcing that an interim unit has been established to start work on the KiwiBuild affordable housing programme.

Taking the 'first steps' to implementing the KiwiBuild programme was another of the coalition Government's first 100 day promises.

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36 Comments

by gooki | 20th Dec 17, 2:32pm 1513733557

“Large-scale sales of state houses during a housing crisis do nothing to help house our most vulnerable people,” Twyford said.

OMG a politician who can do basic maths. Makes the last lot look like a bunch of muppets.

by kpnuts | 20th Dec 17, 3:08pm 1513735723

all the housing stick was going to CHIPS - community housing providers - who would have fitted the bill for modernising and upgrading to the new standards - The houses then remain in the social housing stock for a minimum 20 years - and are only accessible through MSD referrals -

So no changes whatsoever in the number of housing properties only available and accessible to MSD - but the costs of upgrading pushed to the voluntary sector not for profits - in return for 20 years guaranteed tenants - meanwhile the government saves a whole load of money to invest in new housing stock

do the maths

by Ex Expat | 20th Dec 17, 3:39pm 1513737554

I wait with bated breath for Gooki’s reply ;)

by Eco Bird | 21st Dec 17, 12:53pm 1513813989

Me too, I want to learn some Basic Math myself !!

by gooki | 20th Dec 17, 4:28pm 1513740527

Selling them to CHIPS and then renting them back at a rate higher than the government can borrow money for doesn't make longer term financial sense.

"the requirement is 20 years access and the rents paid by the individual are capped. In return there is a financial incentive in that the government tops up the rent to the equivalent market rent insuring the provider is not financially disadvantaged"

by kpnuts | 20th Dec 17, 9:12pm 1513757533

why not - they were already not only renting then at a rate below market - they were also paying all the maintenance costs - so sitting on an asset with huge negative cashflows and -%returns

This way for top up - which is less than the maintenance and upgrade costs they retain the same access to housing stock and support CHIPS to develop additional stock - see todays article as a classic example of how it can happen.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11963130

I am a GM - and in the last five years we have been able to add over 50 long term beds to our portfolio - thanks to the asset base and are currently creating 42 beds in flats in a SHZ and another 20 beds for a long term health facility - none of these are government funded - but that will be another 62 beds of SH as a result of supporting the voluntary sector to develop the housing response -

Our type of social enterprise has been around like CORT for 30 years - and our mission is still teh same - unaffected by governments - and in thirty more years we will still be meeting the needs - if the current stock was transferred lock stock adn barrel - it would be managed more efficiently, better maintained and more accessible - it currently takes 55 days for a HNZ referral and property to be made available - 24 hours for most CHIPS -

The CHIPS would add 10000 homes to the social housing stock in teh next ten years easily - the government - so far not a single additional home announced that was not already in process -- be lucky if 1000 more than currently planned or in progress are actually built and available by the end of this term -

Since when has a government agency ever been more effective than the private sector - and especially not Not for Profits who have operated on a shoestring for decades but delivered in buckets !

by gooki | 21st Dec 17, 9:16am 1513800990

Which is awesome, but why can't HNZ contract out the management/improvement of the properties to CHIPS, rather than outright sell.

As a society we get the benefit of a distributed management of social housing, but retain ownership of the underlying assets.

What benefit do CHIPS get from the ownership?

In regards to government efficiency, there are some offshoots like City Care that are run very well, and are competitive with the private sector.

by Macadder | 20th Dec 17, 11:35pm 1513766100

Crap (John Key) new maths: 2+2 = 3 ish

by sharetrader | 21st Dec 17, 1:00pm 1513814403

the maths did not add up, thats the problem , in the long run it would have cost the Goverment more with no asset to borrow against

by THE MAN 2 | 20th Dec 17, 2:43pm 1513734189

It should not be the governments responsibility to provide housing for people who need to rent.
They have never been very good at it and they won’t be into the future, that is why National were looking at selling some.

by RickStrauss | 20th Dec 17, 2:48pm 1513734507

NZ has a long history of government involvement to address issues where the market hasn't covered the bases. The blanket assertion that they've never been very good at it I don't think is necessarily valid.

This book is a good primer on NZ's history of housing initiatives: http://bwb.co.nz/books/home-truths

Arguably, National may have been selling them off for ideological reasons, a preconceived belief. The resort to spending millions on emergency housing suggests it wasn't necessarily done based on sound analysis.

by Solidname | 20th Dec 17, 3:00pm 1513735218

It absolutely is the Government's responsibility, Government governs for the country not the rentier class looking to make a fast buck out of a human need.

by Ralph | 20th Dec 17, 4:12pm 1513739567

"Government governs for the country"

That's awfully general in nature. You could apply that rational to almost anything at all.

by Didge | 21st Dec 17, 11:00am 1513807252

Out of context. The key point and a most vital one was "NOT THE RENTIER class".

by gordon | 21st Dec 17, 11:23am 1513808586

House values and rents will continue to drop in Christchurch.

by THE MAN 1 | 21st Dec 17, 2:41pm 1513820515

Nonsense, I bought an As-Is property is Chch for $5.37. It might be missing a few walls and is a bit wonky but I have rented it for 6% yield and the value is already up to $10.

by Didge | 21st Dec 17, 2:50pm 1513821006

At last a spruiker that can be truly trusted!

by sharetrader | 21st Dec 17, 1:03pm 1513814580

show your stats to back up " They have never been very good at it "
that is a party political line to justify an ideological point of view, studies have shown that it can cost a goverment more to outsource with no better outcome

by waymad | 20th Dec 17, 2:49pm 1513734545

There's lotsa wiggle-room in this pronouncement. After all, PT's mouth moved....

..selling houses that are no longer fit for purpose..

And, we should all keep an Interested Eye on the other cost - that of implementing "a modernisation programme by Housing NZ [which] will mean more dry, warm and healthy state houses". And which could, just possibly, and in an undisclosed number of cases, mean a near-total rebuild. The rule of thumb in an old house is 'it ain't level and it ain't square'. In State housing, there's a much longer list of 'Ain't's':

P-free
Asbestos-free
Rot-free
Leak-free

PT will have to rattle the trunk of the Magic Money Tree to get the HNZ stock up to That high standard....

by HeavyG | 20th Dec 17, 3:19pm 1513736397

Especially if they demand that same standard from private landlords with a home WOF... "If you live in a glasshouse....".

by kiwichas | 21st Dec 17, 11:19am 1513808374

And hopefully cigarette free, over 5000 different carcinogens per fag

by Pragmatist | 21st Dec 17, 11:38am 1513809520

I hate ciggie smoke as much as the next guy, but unless you are chewing the wallpaper you really have nothing to worry about. Wash the curtains/drapes, wipe the walls and surfaces down and you'll be fine if the house was previously occupied by a smoker.

by Solidname | 20th Dec 17, 3:06pm 1513735601

Does anyone have any info on who actually bought the state houses from National? There was lots of talk about Iwi, Housing societies etc..

I noticed that some of them in the prime location around Orakei have been torn down, and bare plots of land now there instead. Could be delays on the construction of replacements of course, would be interesting to see who managed to get their hands on those goldmines.... I'm sure the sales were all above board, and prime real estate wouldn't have been sold on the cheap to friends or anything.

by Ex Expat | 20th Dec 17, 3:41pm 1513737685

Any addresses we can check?

by Solidname | 20th Dec 17, 3:54pm 1513738495

Kupe Street in Orakei, just had a look on Homes.co.nz and I'm assuming 66 to 88 sold for a total of $16.5m, as opposed to $16.5m each that they've been individually labelled as.

by kpnuts | 20th Dec 17, 4:15pm 1513739711

the large numbers of transfers have all been to Community Housing providers - and require the providers to ensure the properties are well maintained ( something HNZ has not done) and are only available to MSD) i provide some of these services and all referrals are direct from MSD and HNZ waiting lists - the requirement is 20 years access and the rents paid by the individual are capped. In return there is a financial incentive in that the government tops up the rent to the equivalent market rent insuring the provider is not financially disadvantaged - a similar scheme was put in place two years ago for new builds where the government offered up to 40% of the costs of development in return for 20 years exclusive access to teh beds - this has actually increased the housing stock available to the MSD considerably - but does not show as teh properties are not owned or maintained by HNZ

In addition, HNZ is free to sell of individual properties that do not fit the demographic needs - and utilise the money to either purchase or build alternatives. Due to two decades of inaction and incompetence by HNZ under successive Governments, the transition in teh housing stock that needed to occur has barely started - only in the last three years - leaving a completely unfit for purpose stock.

current stock is primarily 3 and 4 bedroom houses - based on the social needs of 40 years ago - the Need is 1, and 2 bedroom units- for the large number of individuals with Mental Health, Offenders, Brain Injury, Intellectual disability and much larger 6+ bedroom homes for some of our very large families, and extended Whanau groups.

by Solidname | 20th Dec 17, 4:42pm 1513741322

thanks for the response KP, so you bought State houses or you had rentals that you now use to house those previously housed by HNZ? How much more percentage wise does it cost to house someone at market rate vs via HNZ?

When you say large numbers of transfers were to CHIPs, does that mean that some haven't been? Were those transfers at market rate?

by kpnuts | 20th Dec 17, 9:27pm 1513758458

see above reply - as a company both - and more importantly we have used that as leverage to develop over 50 extra beds and another 60+ currently in process - so more than tripled the beds available - a result that if replicated across the whole stock would have meant 180,000 homes available not 60,000.

The charge we are allowed to make - is the same as HNZ charge their tenants - most of which is paid by WINZ - either benefit, accommodation supplement or WFF - so no change in governmetn cost there -

the top up is about 15% in most cases - which given that there is no maintenance costs, no costs to upgrade to meet new standards, no costs to maintain the tenancies, rates etc - means its cheaper for the MSD to access a bed than it was before.

The transfers have taken a variety of forms - some pure market rate purchases - some slightly below and some on complicated finance arrangements - which i know no details as i am sure it was probably individual agreements - there have also been a number of sales of houses in teh open market - where the property was no longer suitable for HNZ purposes -

Much of the issues are that HNZ stock - is full of long long long term tenants, who would never meet the current criteria but were housed 10, 20 and 30 years ago on a house for life promise - this means taht the % of stock that is actually available for emergency and transitional housing is very small - classic bed blocking.

the other big issue is that they have about 3% of properties vacant - so nearly 2000 homes - often due to maintenance and repair issues - their annual report makes interesting reading see below - 1500 extra homes in the year - a far cry from the 50 or so in 2008 - The fact is that teh voluntary sector is less constrained and quicker to move and simply does things better and cheaper! HNZ should focus on being an emergency housing provider - not a thirty year+ home for life service -

https://www.hnzc.co.nz/assets/Publications/Corporate/Annual-report/HNZ1…

by imhenry | 21st Dec 17, 7:21am 1513794105

Sounds like the National Govt knew what it was doing

by Ex Expat | 21st Dec 17, 7:33am 1513794828

Agree. Knuts, thanks for sharing that. That’s much more informative than the light weight piece on TV last night where comrades Ardern and Twyford tried to spin their alternate facts along with a tenant insert about no longer being worried about being turfed out of their house. This government is clueless, chained to leftie dogma, and hopefully going to be out of power before it puts us back a few decades.

by Eco Bird | 21st Dec 17, 1:14pm 1513815243

Well put Ex expat, exactly what I was thinking.
The SHOWs they are putting on TV are becoming nauseous and remind us with old communist propaganda material .... just enough to get the sheeples ranting about the glories of a Left gov ..... lol, Talk about basic Math !!

by Eco Bird | 21st Dec 17, 1:15pm 1513815338

Thank you Kp for sharing this info ... we knew some of the end results of that through leasing Houses to HNZ, but you completed the whole picture - well done

by ngakonui gold | 20th Dec 17, 3:19pm 1513736344

Bugger.....thats another 2500 homes FHB won't be able to buy.

by Ralph | 20th Dec 17, 4:09pm 1513739396

"the first and last provider of public housing must be the state"

Why?

by Eco Bird | 21st Dec 17, 1:18pm 1513815506

Because this LOT doesn't know any other way ... and do not learn ...!! even when they spent 9 years on the opposition benches

by sharetrader | 21st Dec 17, 4:44pm 1513827862

the last provider is the state because who in their right mind would take on some of the bottom of the barrel tenants.
BUT if we don't house these families we will pay for it with more social costs elsewhere.