Pricey state houses may be sold or redeveloped

The Government has changed its policy on state houses worth more than $700,000, directing Housing New Zealand Corporation to consider selling them off or redeveloping the land to put more houses on them.

Any action would only be taken once the existing tenants moved out.

Housing Minister Chris Carter revealed the change of heart in Parliament yesterday after being questioned by National housing spokesman Phil Heatley about a $2 million state property in Auckland. It is one of four state house properties in Auckland now valued at over $1.4 million, although the house itself is valued at just $100,000; the land $1.9 million.

HNZC would not disclose the address but Mr Heatley said it was in Glen Innes.

In total 104 properties, all in Auckland, are worth more than $700,000 - the properties Mr Carter has asked officials to assess when vacated.

Mr Heatley has claimed the Government was unfairly subsidising the families in the houses while 11,651 others sat on the waiting list.

While it disposes of property in low-demand areas, the Government has previously refused to consider selling off houses in high-demand areas such as Auckland, although former Housing Minister Steve Maharey indicated last year a policy change was under consideration.

Mr Carter confirmed that change had been made yesterday.

"The Government has asked Housing New Zealand as a prudent landlord to actively look into these high-value properties when they become vacant to determine: whether the property should be sold with the proceeds reinvested in new houses elsewhere, whether the site has redevelopment potential and can accommodate more houses on it; or whether we should rent the house to a new tenant."

Mr Carter said the rationale behind the policy change was the steep increase in property prices, particularly in Auckland.

"Many of these houses were built when the suburbs they are located in were not as desirable as they are today. The value of them lies almost entirely in the land they sit on."

The Government was committed to retaining land in areas where there was a high demand for state housing.

"However, we must make the best use of the resources we have. This review is designed to achieve that. Income from high-value properties will be invested in social housing."

Mr Heatley said: "It's a no-brainer to house five families instead of one in a grossly exorbitant home."

He said the Government could trade the four most expensive houses for 16 state houses at average Auckland property prices, but the policy was "a joke" because the tenant of the $2 million home had been there for eight years. "Any policy to sell these multimillion-dollar state homes when they become vacant is meaningless."