Infrastructure report: A place to call home

By Brierley Penn

Community associations are to play a more substantial role in social housing. Brierley Penn investigates how.

Housing Minister Nick Smith, left, and Housing NZ chief executive Glen Sowry look around a housing redevelopment in Three Kings in March. Photo / Richard Robinson
Housing Minister Nick Smith, left, and Housing NZ chief executive Glen Sowry look around a housing redevelopment in Three Kings in March. Photo / Richard Robinson

Housing New Zealand is the country's biggest social housing provider, owning or managing over 68,000 properties nationwide, and providing homes for more than 200,000 New Zealanders.

To put that number into perspective, there are as many tenants under Housing NZ management as there are people in Hamilton.

"On behalf of the Crown, we manage a portfolio worth $18.6 billion," says Glen Sowry, CEO of Housing NZ. "That's greater than the combined balance sheets of Genesis, Meridian and Mighty River Power. In Auckland, where we operate 45 per cent of our tenancies, we own 7 per cent of the region's total housing supply."

The Government's long-term goal is to erode the existing dominance of Housing NZ's role in the provision of social housing by creating a competitive marketplace for social housing provision. In line with OECD trends, community housing associations will play a more substantial role in the maintenance and provision of social housing.

Already this year, the Social Housing Reform Act has seen the assessment of eligibility for social housing assistance transferred from Housing NZ to the Ministry of Social Development. "This transfer of needs assessment to MSD means there is now an independent purchaser in place, whose role it is to allocate the housing of tenants not only to us, but also to other housing providers," Sowry says.

Scott Figenshow, of Community Housing Aotearoa (CHA), says the goal is for community housing associations to provide up to 20,000 units of social housing by 2020, with around 5000 currently provided by the non-governmental (NGO) sector. Those homes could come in a range of forms, from the traditional stand-alone residential house on a section, to units within a housing development or apartment block.

The broadly accepted target for the community-housing sector was to provide 20 per cent of social and affordable housing by 2020. With the current Housing NZ pool sitting at around 68,000 units, Figenshow considers there is demand to expand the total nationwide stock to around 100,000 homes. Child Poverty Action and the Labour Party, on the other hand, believe there are around 200,000 New Zealanders currently living in homes which do not meet their needs, or which they cannot fully afford. On any estimation, it is clear community housing associations can play a large role in meeting this need.

To achieve the ambitious goals set for social housing, innovative solutions need to be considered. The Government is in the process of determining how the existing housing estate can be managed to provide asset transfers to community housing associations, as well as financing the construction of new stock.

Stephen Selwood, CEO of the NZ Council for Infrastructure Development, says current initiatives implemented by private sector bodies are typically small-scale, with developments ranging from 10-30 homes. "That's not going to deliver anywhere near the number of houses that are required," he says.

"What we're seeing when we look overseas is much stronger partnership between traditional private sector development community and community housing organisations. They're building 200-500 homes at a time, and creating whole communities."

Within these overseas developments, the trend is towards mixed-use and mixed-tenure community developments, or "salt and pepper" communities. The new community may be comprised of one-third social housing, one-third affordable housing, and one-third of homes open to market sales. "The value is that, rather than the traditional state housing communities, where everyone is all at a homogenous level of society, you're actually creating a community at all levels of society," says Selwood. "It's not clear which is a state house and which isn't a state house."

This also encourages residents to take more pride in their home and wider community.
However, perhaps the greatest financial benefit of such initiatives is that open market sales can leverage high land values, while enabling some of the surrounding support services to be wrapped around the more dependent community.

Glen Innes in Auckland is a prime example, with state housing built 50 to 60 years ago being positioned on highly strategic property.

Says Selwood: "The council is now in the process of a unitary plan of zoning that area to be high density, with opportunities to actually build four, six and eight storey apartment dwellings. So you could really leverage the value of that land and the strategic location not only to the water, but to the railway network, and its proximity to employment in Tamaki and the CBD and create a completely new community."

The support services required to sustain current social housing developments, including education, social welfare, policing and infrastructural initiatives, typically impose a large, ongoing financial burden on taxpayers.

Reinvesting taxpayers' money in creating new communities, which are more self-sustaining, and with services which can be operated by community housing associations in the long term, provides opportunities for both financial and welfare gains.

"That could be on the table as a service subsidy, for a provider to come along and provide those services," Selwood suggests.

However, the Government policy and support for these initiatives needs to be made more clear and consistent.

"There definitely is an appetite in terms of the private sector construction investment community and the facilities maintenance community as well. But there are some policy barriers; the Government hasn't yet been very clear on how it wants to deliver this at scale," he says.

Specifically, financial support to incentivise private sector investment into these inherently less profitable developments, and ongoing security for those seeking to invest must be provided.

Figenshow says the implementation of an accreditation framework for providers that satisfies regulatory requirements will also be an important focus for the community housing organisations under the CHA umbrella. CHA foresees the construction of 15,000 new homes, requiring a capital investment of over $5 billion. This will be structured through $2.5 billion of debt, $1.25 billion of land value currently in the state housing pool, and $1.25 billion of grants.

Housing NZ will continue to play a crucial role in this new landscape for social housing, and Glen Sowry is under no illusions as to the challenges that lie ahead.

"The changing landscape will place greater emphasis on the way we manage our tenancies and our assets," he says. "Critical to our success will be the skills and expertise to forecast tenant demand and deliver the right properties, in the right places. "

So what will this look like in practical terms?

The New Zealand that existed 50 years ago, when the bulk of state housing was built, was dramatically different to the social, economic and demographical make-up of today. The most common household type for Housing NZ nationwide is now one parent, with one or more children, closely followed by a single, elderly tenant. Over half of all applicants waiting for social housing require smaller one or two bedroom, low-maintenance properties. Conversely, in Auckland, large families with many children require four, five or even six bedroom homes. None of these modern realities match the traditional three-bedroom state housing that dominates our current housing pool.

"Housing New Zealand's single greatest asset is the inefficiency of its land and the ability to materially increase the amount of modern, well-designed housing stock on it," says Sowry. "Housing shortages - and the associated challenges of affordability and overcrowding - are among Auckland's biggest problems.

"Providing homes, particularly for those most affected by these problems, is what we do."

In this way, Housing NZ can support Auckland's Unitary Plan, and its goal to become the most livable, compact city in the world. The plan will allow Housing NZ to leverage off its existing strategically located properties to expand the housing pool. "In its proposed form the Unitary Plan will allow Housing New Zealand to develop up to 19,000 additional dwellings over the next 50 years across its current Auckland land holdings," says Sowry.

"By amending zoning and other residential provisions, we believe we can comfortably push this figure up to nearer 40,000. "

Though these will not all be Housing New Zealand properties, this increased intensification and more efficient land use can allow for expansion at a more financially viable cost. "Intensification does not mean sacrificing the tenets of community, nor should it be something to fear when done well," he says.

"We have, over the past five years, seen areas of central Auckland, such as Britomart, Wynyard Quarter and Fort St transformed through innovative urban design into pedestrian-friendly, safe, modern precincts - all this while still deferring to the architecture on which the city was founded.

"Housing New Zealand's future endeavours will be no different."

The wrong mix

New Zealand's current pool of social housing is failing to meet the needs of our dependent communities. The stock is no longer fit-for-purpose, with the wrong mix of large and small homes, many of which are poorly located and expensive to maintain. A significant number sit in strategic locations on largely under-capitalised land. In this context, it is clear that progress needs to be made, but the "baby steps" of current policy do not go far enough to meet growing demand. Huge opportunity remains to scale-up developments in partnership with community housing organisations and private development communities, paving the way for New Zealand to allocate social housing assets more efficiently.

- NZ Herald

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