Infrastructure report: Housing realism after the quakes

File photo / Rocky Batchelor

Christchurch City Council is poised to form a company to enter the affordable housing market and shake up the provision of social housing services in the earthquake-damaged city.

After Housing NZ, the council is the country's second biggest landlord with 2600 social housing units. But its current portfolio is no longer financially viable; a problem compounded by the Canterbury earthquakes.

Deputy Mayor Vicki Buck is leading the proposal to set up the limited liability company which will be expected to match current social housing units in the council's portfolio and catalyse at least 1000 more.

Under the council's preferred plan - which has already received strong feedback from the city - the ownership of the social housing portfolio will be transferred to the company.

Initially, the council will own the company outright and appoint the first set of board directors. But its ownership stake will reduce to 49 per cent after a shareholding partner, or partners, is introduced.

The plan is not the only option on the table. Some councillors prefer the council to gets out of social housing altogether and transfer the ownership of the portfolio to a third party.

The council-controlled company will be able to register as a community housing provider and be eligible for the Government's income-related rent subsidy. The council says the income stream from this subsidy would hugely improve the financial viability of its social housing stock and allow it to be sustained, improved and grown.

The new company will be able to work with the council's city housing partners to redevelop some land currently used for social housing - in effect, working in a public private partnership along the lines spearheaded by Westpac in Sydney with its ground-breaking Bonnyrigg project.

The council says that should the company become eligible for the Government's Income Related Rent Subsidy, most of its current social housing tenants would pay a lower rent than they now do. Rent levels would be set by Work & Income based on tenants' income, assets and other criteria.

What is the Housing Accord?

The council and the Government have signed a draft housing accord to increase affordable houses in the city, including social housing. The accord is subject to ratification by the council based on the outcome of future consultation with residents on the council's role in providing affordable housing.

Who lives in the Council's social housing?

A wide range of people are eligible for the council's social housing service, including the elderly, disabled persons, sickness or unemployment beneficiaries and people on very low incomes. In general, all these people have met financial hardship criteria. They are also some of Christchurch's most vulnerable residents.

How would the Council's proposal affect rates in Christchurch?

That will depend on the outcome of re-evaluating the council's role in providing a social housing service in Christchurch. If the council was to decide to use rates income to fund social housing, it is estimated this would require $9 million per year, with an expected rates increase of 2.3 to 2.7 per cent.