Social housing overhaul

Up to 2000 houses will be sold as part of the Government's revamp of social housing, and the number of people receiving income-related rent subsidies will increase by almost 5%.

Wednesday, January 28th 2015, 12:00AM

by The Landlord

Prime Minister John Key has described plans to overhaul social housing over the coming parliamentary term, in a speech at the Stamford Plaza.

He said tenants on higher incomes could be encouraged to move on to make way for needier cases, houses would be sold to approved social housing providers and redevelopment was likely to provide houses that were a better fit for tenants' needs.

A review of Housing New Zealand's role as the country's biggest landlord would be completed over the first six months of the year.

Once that happened, the Government would look to sell 2000 properties over the next year and up to 8000 by 2017.

"Community housing providers may want to buy properties on their own, or they may go into partnership with other organisations who lend them money, contribute equity, or provide other services," Key said. "Properties will have to stay in social housing unless the government agrees otherwise, and existing tenants will continue to be housed for the duration of their need. Selling properties in this way doesn’t reduce the number of social housing places. It just means more of the tenancies will be managed by a non-government housing provider rather than Housing New Zealand."

He said the Government was conscious that the sale had to work for taxpayers and would be looking to get a fair price for them. "They’re being sold as ongoing social houses with high-need tenants. We’re not selling them as private homes or rentals. So we might not get the book value of the properties. But that’s only because, under accounting rules, the value of houses in the Government’s books is based on a theoretical sale in the open market. And that’s not what we’re doing."

The Government has budgeted $1.9 million this year in housing subsidies for people on low incomes.

About $1.2 billion of that is for the accommodation supplement, which helps people pay for private rentals and mortgage payments.

The other $700 million is for the income-related rent subsidy for those in social housing.

That used only to be available to those living in Government-owned accommodation but people who live in properties run by approved community housing providers and were referred there by the Ministry for Social Development now also qualify.

Key said: "The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year. In particular, there will be an increase in social housing in Auckland and increase in Christchurch. In Auckland, as part of this growth in social housing, an initial 300 income-related rent subsidies will shortly be offered to community housing providers."

Green Party co-leader Metiria Turei said the planned sale would benefit developers and landlords at tenants’ expense.

“John Key’s plan amounts to a major transfer of wealth: New Zealanders give away our state homes at bargain basement rates, developers make a healthy profit and landlords get rich from increased rent subsidies. This harks back to the 1990s, when the accommodation supplement was supposed to be the solution to helping lower income New Zealanders afford a decent home, but ended up going straight into the pockets of landlords. But this time, we lose our state homes as well," she said.

“The fact is, New Zealand desperately needs more affordable homes and better services to house the vulnerable, and the best way to build affordable houses is for the Government to step up and do it. Government can borrow cheaply and achieve significant economies of scale, without having to make a profit off the build. But National is ideologically allergic to the state owning homes, and will sell up, regardless of the consequences."

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