Minister says sale of up to 8000 state houses will help Housing NZ double building rate.

Prime Minister John Key grew up in a state house on Hollyford Ave in Bryndwr, in west Christchurch.

Yesterday, many residents of the quiet, tree-lined street, which is made up of a mixture of privately-owned homes and red brick and pastel-painted weatherboard state houses, were disappointed at the new housing plans.

The man who answered the door at Mr Key's old home, 19 Hollyford Ave, was evidently not a fan of Mr Key, and declined to comment.

Shelley Anderson, a 44-year-old mother and assistant manager at a bar/restaurant, is waiting for Housing New Zealand to carry out earthquake repairs to her Hollyford Ave house, more than four years after the shaking started.


She said Mr Key had "forgotten where he's come from".

"Rents are dear enough in Christchurch after the earthquakes and this will make things even worse," she said.

A few doors down, Jo Davies, a 26-year-old nanny, said state houses should remain under government control.

"If you're on a benefit, you can't afford the rents. It's hard enough if you are working," she said.

"You think he'd be a bit more on to the struggle that people are having just to pay their bills."

Instead of off-loading its state housing stock, she thought the Government would be better off sub-dividing the large sections many of the properties are on.

Her housemate, vet nurse Pam Walker, said the plans will add more stress to the housing market.

"I don't think it'll be good socially in the long term and [is] bound to lead to rents going up again," she said. "There's a big need for social housing in New Zealand. Where there is a need, you need the houses to cater for that need. It's as simple as that."


What the state housing policy involves

The Government has promised to build thousands of new state houses at the same time as it sells off up to 8000 existing houses over the next three years.

Social Housing Minister Paula Bennett says the Government will use the proceeds of state house sales partly to double Housing NZ's new building rate to more than 1000 a year.

That increase, plus evicting many of the 3300 state tenants already paying market rents, appears to account for most of a planned increase of 3000 tenants receiving income-related housing subsidies by 2017-18.

New details, announced in Prime Minister John Key's state of the nation speech to the Auckland Rotary Club yesterday, put some limits on a policy that originally aimed to lift the community sector's share of social housing from about 5 per cent to 20 per cent.

Mr Key said sales would be limited to 1000 to 2000 in the next year and to an effective maximum of 8000 - 12.8 per cent of the state housing stock - by 2017. By then Housing NZ would still have at least 60,000 properties.

He promised to put some of the sales proceeds into an extra $40 million a year in income-related housing subsidies by 2017-18, lifting the numbers on the subsidies from 62,000 to 65,000.

The rest of the proceeds would be used "for housing and other capital projects needed across government". Ms Bennett said there would be "a doubling of the amount of new housing by Housing NZ".

"They actually did about 490 houses last year. They are on track to do 1039 in the next 12 months, but I think they can do better than that," she said.

She said houses would be sold by competitive tender, with separate contracts for social services to keep sales contracts "clean". However the Government might accept less than the highest-priced bid to get better support for tenants.

Mr Key said sale prices would be below open market values because buyers would have to keep properties in social housing.

To watch Key's speech, visit:

Housing NZ is to accelerate reviews of its existing tenants from about 2000 announced previously to 5000 over the next two years. Reviews will target the 3300 tenants already paying market rents and others on near-market rates, requiring many of them to move into private rentals or home ownership.

Fletcher Housing director Alan Jackson said private developers would be interested in forming consortiums with community agencies. Labour housing spokesman Phil Twyford said ministers were trying to hose down public alarm about a large-scale sell-off of state housing.

"It is clear that they are moving to a different model of social housing where anybody can own the houses and the Government just pays a subsidy," he said.

"The legislation and their public statements have explicitly left the door open to for-profit providers."

Selling state houses

Why is the Government selling state houses?

Ministers want to encourage "a more diverse ownership of social housing with more innovation and responsiveness to tenants and communities".

How many will be sold?
About 1000-2000 in the next year and up to 8000 in the next three years.

Who can buy them?
Anyone, in theory, but they must be managed by registered community housing providers. They may form consortiums with iwi and private developers or financiers.

What are the conditions?
Properties will have to stay in social housing unless the Government grants an exception, such as for a mixed public/private development of more intensive housing on a site.

What else is changing?
About 5000 existing state house tenants will have their tenancies reviewed in the next two years and those whose incomes are high enough to rent or buy in the private market may be required to move out, making room for some of the 3600 people on the priority social housing waiting list.