23 May 2024

Community housing providers welcome fund to 'crack on' with building stalled projects

9:38 am on 23 May 2024
An apartment building under construction in Wellington

The government says it plans to unlock land and build infrastructure, making housing affordable. Photo: RNZ / Angus Dreaver

A community housing group welcomes the $140 million investment in social housing.

The government has scrapped the First Home Grants scheme which is expected to recoup about $245m over four years. It will put that money towards social housing.

It also announced $140m, over the next two years, in new funding for 1500 new social housing, to be provided through community housing providers rather than Kāinga Ora.

"This is welcome news from our community housing provider members; it enables them to crack on with building," Community Housing Aotearoa deputy chief executive Chris Glaudel told Morning Report.

There were about 500 homes stalled due to a lack of funding, he said.

He said the 25-year contracts with the government, through the Ministry of Housing and Urban Development, "guarantee payment of market rent".

And with that backing, community housing providers could secure finance to develop new homes.

They were looking at new sources of finance, maybe through direct government lending or through support for a bond aggregator.

"When you look overseas at what they're doing in Australia or the UK, you see good examples where large volumes of finance are able to be sourced at below what we're currently paying, in terms of investor rate mortgages with the commercial banks."

A combination of the government providing upfront capital - that reduces the amount of borrowing and interest costs - along with a spread-out operating expenditure through the payment of the market rents, would give the best results, he said.

"Our providers, in addition to providing social housing, are at the frontlines of emergency housing and transitional housing."

Glaudel would not say if community housing providers turned tenants away, instead he said they could choose households that best matched the available tenancy.

National MP Chris Bishop

Housing Minister Chris Bishop. Photo: RNZ / Angus Dreaver

Housing Minister Chris Bishop told Morning Report the government would set up 25-year contracts with community housing providers.

"Every single dollar of the savings will go into social housing places."

It was about reprioritising expenditure, he said, and believed "most reasonable people, when they think about what's more important, they'll think about social housing".

The scheme, set up by the national government in 2015, had to stop at some point, Bishop said.

"We've had to make some tough decisions because of the fiscal reality we've been confronted with, and we've also had to fill in the funding gap around social housing."

Signalling further cuts to grants, Bishop said Kāinga Ora's First Home Partner, which is a shared ownership scheme, had run out of funding, and "I'm not giving you any commitment that we will put more money into it".

Bishop said the government was focused on a "comprehensive housing plan is the answer, not demand-side measures like the first home grant", which pushed up house prices.

The plan was to unlock land and build infrastructure, making housing affordable.

"I want to see rents fall. I want to see house prices fall. I want housing to be more affordable."

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