Govt sets up agency to transfer state houses

The Government wants Housing NZ to sell some of its houses to community providers to lift the community sector's share of social housing to 20 per cent by 2017. Photo / Greg Bowker

The Government has agreed to set up a new entity to transfer state houses to community housing providers at prices that could be as low as half their book value.

Finance Minister Bill English and Housing Minister Nick Smith said the new entity would be developed in the next six months by an establishment unit staffed by the Treasury and the Ministry of Business, Innovation and Employment. Funding was provided in the Budget through Vote Finance.

"This dedicated entity will help develop the fair and effective and efficient social housing market the Government wants and tenants need," the ministers said.

Community Housing Aotearoa requested the new unit last month in a bid to break a stalemate in negotiations with Housing NZ to buy some of the country's 69,000 state houses.

The Government wants Housing NZ to sell some of its houses to community providers to lift the community sector's share of social housing to 20 per cent by 2017. But negotiations have been blocked by Housing NZ's belief that it needs to obtain at least the full book value of its assets.

Community Housing Aotearoa has suggested valuing the houses based on their "restricted cash flow" value - the value of their future income streams on the restricted condition that they must be retained for social housing.

CHA director Scott Figenshow said a two-bedroom duplex unit in Freemans Bay, Auckland, with a 2011 rateable value of $570,000, would have a restricted cash flow value of only just over half that - $300,000, based on the rent of $89 a week paid to Housing NZ by its 71-year-old tenant plus an income-related rental subsidy of just over $300 a week.

Dr Smith said at the time that he was "open to some degree of discounting" to achieve the target of lifting the community housing share of social housing.

Housing NZ has about 69,000 houses, local councils have about 11,000 and the community sector currently has about 5000. The biggest providers are IHC subsidiary Accessible Properties with about 900 houses, and the Salvation Army with between 400 and 500.

Lifting the community share to 20 per cent by 2017 means adding about 12,000 to the current number, or around 13,000 allowing for some growth in social housing.

Dr Smith said some of the increase would come from new housing and through other changes such as a proposal, currently out for public consultation, to transfer Christchurch City Council's 2000 houses to a new entity that would be owned jointly by the council and the community sector.