Govt quietly drops 'RightSize' housing

The project would have seen 3000 new bedrooms added at a cost of $260 million. Photo / Chris Gorman

Housing New Zealand has quietly dumped a $377 million programme to add new bedrooms to existing state houses and build hundreds of new homes on subdivided sections in favour of a larger scale redevelopment plan in Auckland.

Advisers for the new programme include property developer and discharged bankrupt Nigel McKenna.

In May last year the Government announced the "RightSize" plan to convert 2000 three-bedroom state houses to four- and five-bedroom homes.

The project would have seen 3000 new bedrooms added at a cost of $260 million. In a related initiative, $117 million was to be spent on building up to 500 new two-bedroom homes on subdivided state house sections.

However, in a response to written questions from Labour's housing spokesman Phil Twyford, Housing NZ Minister Bill English has confirmed the two initiatives would be halted next year, by which time it was expected just 274 new bedrooms and 122 new homes would be built.

So far 199 bedroom extensions and 59 two-bedroom homes have been completed.

"The proposed Auckland Unitary Plan and the introduction of Special Housing Areas has meant that Housing New Zealand has needed to review redevelopment opportunities to ensure it can best utilise its land holdings," Mr English said. "Sites that Housing NZ would have previously identified for the RightSize programme may now have redevelopment potential, as a result the target number of RightSize properties for completion has reduced."

Mr English this week expanded on plans for redeveloping Housing NZ's Auckland properties.

"We're the largest land owner in Auckland. We own probably $10 billion to $12 billion of houses. A lot of that land could be used more efficiently both to do a better job of social housing for people in real need but also to provide more affordable land and housing to the Auckland market."

Housing NZ had a number of small redevelopments where sites that had 10 or so state homes were "being turned into something like 50 or 60 units where the Government keeps 20 and the rest get sold to the market".

"We'd be looking at doing some of that redevelopment at scale such as is starting to happen in Tamaki in Auckland where some pretty large scale developments are under way."

Housing NZ has been receiving advice on its 550-home Tamaki redevelopment from Mr McKenna through consultancy firm Development Advisory Services Ltd (DASL).

A Housing NZ spokesman said DASL was assisting Housing NZ's "decision-making around options for new multi-dwelling projects, through which we can reconfigure our ageing property portfolio to provide fit-for-purpose new homes that meet the needs of our tenants".

Irish migrant Mr McKenna worked on projects including Auckland Viaduct's Lighter Quay and Queenstown's Kawarau Falls but made himself bankrupt in April 2011, saying he was unable to pay his debts.

Earlier that year, he tried to appease creditors claiming more than $150 million from him by offering $1.25 million. He was automatically discharged from bankruptcy in April this year.

Housing NZ said existing homes would be replaced with new units at a ratio of about three new dwellings for each existing one. It anticipates completing about 880 new homes by the end of next year.

Mr Twyford said the Government announced the RightSize programme "with huge fanfare last year".

"With little more than a whimper they've quietly canned the whole thing and [are] pretending it never happened."

He said the Government was not being upfront on what its plans for Housing NZ properties was.