Community and iwi groups have asked the Government to sell them up to a fifth of the country's 69,000 state houses at a discount of up to about half of market values.
A policy paper issued last week by Community Housing Aotearoa and the Maori housing association Te Matapihi proposes selling state houses at "restricted cash flow" valuations based on their rents, on the basis that they are restricted to use as social housing for needy tenants.
Community Housing Aotearoa director Scott Figenshow said a two-bedroom duplex unit in Freemans Bay, for example, with a 2011 rateable value of $570,000, would have a restricted cash flow value of only just over half that - $300,000 - based on the rent of $89 a week paid to Housing NZ by its 71-year-old tenant, plus an income-related rental subsidy of just over $300 a week.
Housing Minister Nick Smith told the Herald he was "open to some degree of discounting" to achieve his target of raising the community sector's share to 20 per cent of all social housing by 2017.
Community agencies have about 5000 houses. The biggest providers are IHC subsidiary Accessible Properties, with about 900 houses, and the Salvation Army, with between 400 and 500.
Housing NZ has about 69,000 houses and local councils have about 11,000, making a total social housing stock of 85,000.
Lifting the community share to 20 per cent by 2017 means adding about 12,000 to the current number, or around 13,000 allowing for some overall growth in social housing.
Dr Smith said some of that increase would come from new housing and through other changes such as a deal announced last week to transfer Christchurch City Council's 2000 houses to a community provider.
But that could still leave a target of about 10,000 state houses to be sold to community and iwi providers in the next three years.
The market value of all state houses last june was $16.4 billion, so the market value of 10,000 state houses could be about $2.4 billion.
Discounting that by about half could wipe about $1.2 billion off the Government's balance sheet.
Accessible Properties chief executive Andrew Wilson said his agency would be have the capacity to buy "in the vicinity of 1000" state houses at the right prices and was keen to expand beyond its traditional disabled clientele.
Ron Nepe of Gisborne's Te Runanga o Turanganui a Kiwa said that his agency and neighbouring Ngati Porou were negotiating to buy Gisborne's 1300 state houses.
Victoria Kingi of Tauranga-based Nga Potiki a Tamapahore Trust said she was discussing the possible purchase of 149 state houses in the Tauranga-Papamoa area.
Haami Piripi of Kaitaia-based Te Rarawa said Far North iwi had had "initial discussions" with Housing NZ on buying the Far North's 60 state houses.
All community and iwi agencies said they could provide "wraparound" social services to tenants.
Labour housing spokesman Phil Twyford said Labour supported selling state houses to community and iwi providers, as long as total social housing numbers increased, and he saw the price as "something for negotiation".
Discount example22 Ryle St, Freemans Bay
Market value (July 2011): $570,000
Restricted cash flow value: $300,000
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