The government says it is removing barriers to make it easier for community housing providers (CHPs) - such as the Salvation Army - to build and provide social housing.
CHPs operate about 13,700 social homes across New Zealand.
Speaking in Auckland on Tuesday, Minister of Housing Chris Bishop said the government wanted CHPs to be treated on a level playing field with the state-owned Kāinga Ora / Homes and Communities.
Housing Minister Chris Bishop at the social housing announcement. Photo: RNZ / Marika Khabazi
"Social housing is an important part of New Zealand's housing market, providing affordable rental housing for low-income tenants. CHPs do a great job of providing housing for people in need and already operate around 13,700 social homes across New Zealand."
Although they could access Income-Related Rent Subsidies (IRRS), CHPs often struggled to get funding that fairly reflected underlying risk for building social houses, while Kāinga Ora was able to use funding by the government, Bishop said.
The government was "agnostic" as to whether the state or community sector delivered social housing, he added.
"Where we want to get to is a system of neutrality between Kāinga Ora and the community housing sector. It actually doesn't really matter who builds the houses, as long as they get built."
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The current process for funding housing was "expensive, duplicative and often very opaque", he said.
Housing needs differed from one region to the next, he said. In Rotorua and Hamilton, for example, many people were living in motels.
"There's no one size fits all - it's about embracing all of the community sector in its diversity and making sure we can fund them to build the houses that we need."
Asked by reporters if the government was satisfied with the performance of Kāinga Ora, Bishop pointed to an independent review that was critical of the agency's financial sustainability, and the appointment of a new board.
The government had requested a "turnaround plan" for Kāinga Ora, which had been received and was now under consideration, he said.
"Our absolute aim is to get Kāinga Ora back to financial sustainability, drive down the cost of construction of new ... houses to make sure we can build as many of them as possible within the funding envelope that's there, and look after people in need."
To lower financing costs for CHPs, officials had been directed to:
- Change contracts for new housing to make the IRRS revenue stream more attractive for investors and financiers; due early 2025.
- Increase use of leasing to provide social housing, where this would deliver value for money; due mid-2025.
- Capitalise part of the operating supplement currently paid to CHPs for new housing developments, to be paid upfront when contracts for new social housing were agreed. This would come into effect in the new year.
The Reserve Bank was also considering options to review standardised risk weights, and the minister expected this to prioritise the treatment of CHPs.
"Both Ministers and the sector are concerned that current risk weightings penalise CHPs, reducing their ability to borrow at competitive rates from banks," Bishop said.
"The Government is also committed to exploring a credit enhancement intervention for CHPs so that they can access suitable debt. Over the next three to four months, the government will consider a range of options to support CHPs' access to debt on terms reflective of their real risk and circumstance.
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