A charity tagged as a likely buyer of state houses says it is reviewing its involvement unless it can get either more capital from the Government or a very low price for the houses.
Salvation Army social policy director Major Campbell Roberts says the army has brought in consultants to crunch the numbers and found that it could not do any better than Housing NZ unless the Government put up some of the capital required to bring state properties up to acceptable living standards.
He says it would be morally wrong for the army to force tenants out for redevelopment without their consent, and that any state houses that are sold should go to genuine local community organisations part-governed by the tenants themselves.
"I think it's essential ... tenants are engaged in this whole exercise. If [not] it's going to be a disaster."
Ministers have repeatedly cited the army, which owns more than 400 rental houses mainly for the elderly, as a likely buyer for state houses.
Prime Minister John Key said last week that the Government would consult on selling 1,000 to 2,000 state houses in the coming year. Asked about likely new owners, he said: "It could be an iwi, for example in the Far North. It could be a situation where it's the Salvation Army with a particular focus in a particular area. It could be disability support."
Many iwi, including Northland's Ngapuhi and Te Rarawa and Auckland's Ngati Whatua, confirmed this week that they want to buy houses.
Accessible Properties chief executive Andrew Wilson, whose IHC-owned agency is the biggest community provider with 1100 units mainly for people with disabilities, said he also wanted to buy in areas of need such as Auckland, Christchurch, Wellington, Hamilton and Tauranga.
"We have a shareholder, IHC, which has [an] asset base of about $260 million," he said. "It comes down to what prices they sell at."
But church-affiliated providers, who met in Auckland on Wednesday, are more cautious on both economic and moral grounds.
Council of Christian Social Services president Lisa Woolley, whose VisionWest agency was started by the Glen Eden Baptist Church and owns 63 houses, said: "We don't have huge bank balances, so there still needs to be some way of funding the community housing sector to grow ... because the bottom line is we have to have more social housing."
New Zealand's social housing sector is small, with only 5 per cent of all occupied homes owned by Housing NZ, councils or community groups. That is the same share as in Australia, and double that of the United States, but far below some European countries such as England (18 per cent), France (19 per cent) and Sweden (21 per cent).
A 2010 report said 32,000 of what were then 69,000 state houses were built between 1937 and 1949, and the state funded two-thirds of all house-building via state housing and cheap home loans into the 1970s. In 1960, 64 per cent of new homes were priced below the median value of existing homes.
However state home-lending ended in the 1990s. The Productivity Commission says new homes priced below the median value of existing homes plunged from 51 per cent in 1989 to 15 per cent in 2011. We virtually stopped building houses for the poorer half of the population.
Major Roberts says one result is we are now placing our most vulnerable people into "state houses which we really shouldn't send them to because they are in such bad condition".
He says most state housing desperately needs to be redeveloped. But the Salvation Army's modelling has found that it would not be economically feasible, for example, to replace the 2,000 ageing state houses in Mt Roskill with 3,000 new homes, sell 1,000 of them and keep the rest for social housing without state funding.
"You'd virtually have to sell those houses to the market to make the whole thing work," he said. "So it's still going to require ... significant Government capital funding."
He said that funding could be provided by selling state houses at well below market prices, with discounts based on the redevelopment potential of each site.
The Tamaki Housing Group is organising a national tenants' conference on February 21 to start a campaign against state house sales. Spokeswoman Sue Henry said Tamaki tenants "had their whole lives turned upside-down" by being forced out for redevelopment.
The conference will be at the Bhakti Centre, 11 Pleasant View Rd, Panmure, from 10.30am-4pm.