Developers forgo profit to help ease capital's housing issues

7:14 pm on 6 December 2018

More buildings in Wellington are set to be converted into apartments to be rented out by the city council.

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Photo: 123rf

City councillors today voted unanimously to start the process into getting approval for six more inner city buildings to be converted into apartments.

In September construction started on the first conversion, with developer The Wellington Company behind the build.

The council secured a 15-year lease on that building, and would try to get longer leases on the ones coming, mayor Justin Lester said.

The rent would be cheaper than market rates, ranging from $400 to $700 for one to three-bedroom apartments.

They would only increase according to CPI as long as the council was the landlord.

The apartments would help fix a private rental market that was not working, Mr Lester said.

"It's not working for students, it's not working for young professionals, it's not working for people who are in key worker groups like teachers, policeman, or the fire service.

"People are having to move further and further away outside the CBD and that's not the type of city we want to live in."

There would be no impact on rates, Mr Lester said, and all of the risk sat with the building owner, who in turn would be guaranteed 15 years of tenancy with council the property manager for the apartments.

The first conversion, called Te Kaainga Aroha on Willis St, would be ready next year. It was likely the first of the following six would be ready in early 2020.

The council had approaches from other developers and each would be assessed, Mr Lester said.

Councillor Brian Dawson, who holds the housing portfolio, said it was a partnership with private developers that would benefit the city.

Developers were foregoing some profit by renting the buildings to the council for housing, he said.

"I think they have the best interests of Wellington at heart, and that's the key to it. They are in business and quite frankly every business has to make money to survive, there's no question about that.

"But in this case what we've got is proposals in front of us which say we can run a good business at the same time as doing something that will benefit the city."

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