The Government has agreed to fund an extra 508 social housing units in Auckland in a surprise boost to previously announced policies.

Social Housing Minister Paula Bennett said today that five community housing providers would get income-related rental subsidies to provide the 508 extra homes - up from 300 planned when the ministry announced a tender in May.

The country's biggest non-government housing provider, IHC subsidiary Accessible Properties, gets 358 of the new subsidies - adding about a third to its 1000 existing homes around New Zealand.

Its general manager Andrew Wilson said 58 would be new homes and the other 300 homes would be leased from private owners.


The Salvation Army gets subsidies for 50 new pensioner flats in a planned multi-storey development behind its regional headquarters in Royal Oak, plus 37 subsidies for existing pensioner flats elsewhere in Auckland which will start getting the subsidies as current tenants move out and new tenants move in.

The Chinese New Settler Support Trust gets subsidies for 36 homes.

A further 27 subsidies will go to two other providers who are expected to sign contracts shortly.

The subsidies pay the difference between social housing rentals, which are fixed by law at 25 per cent of tenants' incomes, and market rents.

A single superannuitant living alone currently receives $374.52 a week after tax, so their social rental would be fixed at $93.63. But the mean rent for houses in Auckland in October was $503.04 a week, implying a potential subsidy of several hundred dollars a week for each unit.

In addition, Mrs Bennett has said that the ministry is willing to pay 10 to 20 per cent of the costs of new building as an upfront development payment, plus extra fees to manage higher tenancy costs.

Salvation Army spokesman Major Campbell Roberts said the ministry would pay about $1 million of the $25 million cost of the army's 50 new pensioner flats as an upfront advance.

"Paying upfront makes it easier for cash flow," he said.


"We will obviously need to fund the rest of it in a normal commercial way. The advantage of being able to access the income-related rental subsidy is that it provides a secure income."

The new subsidies will make a significant dent in the Auckland social housing waiting list of 2172 households at the end of September.

The ministry has also opened another tender for a further 1000 social housing places in Auckland which closes on November 26 next year.

Labour housing spokesman Phil Twyford said the 508 new places were "woefully inadequate compared to the high levels of homelessness, overcrowding and slum housing".

"The promise of another 1000 places means they have even scaled down from the 1810 places they earlier proposed," he said.

But Bennett's spokesman said the Government "has a number of other ways it is working to increase the social housing supply in Auckland, including redevelopment of Housing NZ properties, building social housing on Crown land, and through reviewable tenancies".