Social Housing – show me the houses?

State house rainbow

State House Rainbow copyright Andym5855

‘We hope to have more social housing but we still don’t know how’ could be a fair summary of recent announcements about the Government’s intentions for social housing.

NZCCSS believes that we need a clear public commitment from the Government to ensure there are thousands more social housing units available as soon as possible to meet the immediate needs of 5,000 people waiting now for social housing and an estimated 34,000 people in homelessness or insecure housing.

It appears that the Government believes that around the current level of social housing units is indeed ‘enough’ and funding is being firmly capped at a maximum of 65,000 subsidised social housing units by 2017 (about 5% more than currently). The government wants to see people moving through social housing faster and moving on into ‘independence’ in the private rental market or so-called ‘affordable’ housing ownership market. Government-owned Housing NZ Corporation (HNZC) properties will be used to boost the number of properties being sold in the ‘affordable’ market by redeveloping existing properties with more units on them.

Housing Summit – More Social Housing Desperately Needed

A recent summit of representatives nominated by church leaders met in Auckland to discuss the churches’ possible response to the many changes happening to social housing. One thing everyone agreed on is that more social housing is needed, a great deal more than we now have. NZCCSS President Lisa Woolley, who is CEO of Baptist community housing provider VisionWest told the NZ Herald that while some in the sector are wanting to do more they are also very cautious:

“We don’t have huge bank balances, so there still needs to be some way of funding the community housing sector to grow … because the bottom line is we have to have more social housing.”

Given the desperate need at the lower end of the housing market for affordable social rentals, the priority must be to require that the number of social housing units grows considerably. The summit also was clear that any transfer of government-owned housing needs to ensure that the housing stays in some form of community ownership that is genuinely accountable to communities.

NZCCSS and others in the sector are doing all they can to get better results for low income tenants and will be seeking clear commitments to significant numbers of new social housing units.

Under the current Government plans it is hard to see many more social housing units actually being built, yet there will be enormous disruption and change to existing systems. The sheer scale of the changes taking place represent huge risks and also some opportunities for those involved – tenants, housing providers and funders. Overall It is hard to see the outcomes being hugely beneficial for those most in need of good housing. The work has the feel of another expensive exercise in rearranging the deck chairs on the social housing ship that is just too small.


 

 
Getting clear about what we are talking about:
social housingAround 85,000 units. Total of community housing, local authority & Housing NZ Corporation (HNZC) housing. This is around 5% of all 1.5 million houses in NZ. Just to make things more confusing, the Government now defines ‘social housing’ as only those tenancies where an income-related rent is being paid, therefore excluding almost all community housing and local authority housing.
state housingAround 68,000 units. Owned directly by the government through HNZC. About 5,000 of those tenancies are market rentals & not subsidised by the Income Related Rents Subsidy (IRRS)
community housingAround 4,000 community housing units and 13,400 local authority units (see Community Housing Aotearoa reports on housing stock)
affordable housingAny form of housing that does not costs more than 30% of total household income after tax
What the government spends on social housing & housing subsidies
AS (Accommodation Supplement)paid to 290,000 households, a total $1,200 million
IRRS (Income Related Rent Subsidy)paid to 62,000 tenancies (130 to community housing tenancies, the rest to HNZC tenancies) a total of $718 million.
Housing NZ Corporation (government-owned houses)HNZC  stock valued at $18,700 million but about one third in wrong place or wrong type to meet need.

 


 

Where is the Plan to Grow Social Housing?

Other than the vague promise that Housing NZ and community housing providers “collectively will provide more housing places than there are today”, the government has identified no targets or revealed no plan of how to get these houses. Despite releasing Cabinet papers, media releases and speeches, important details are not known.

No detailed analysis of the level of need and demand for social housing has been published. Using the available information, we know that there are (as at December 2014) around 5,000 waiting now on the social housing register who are assessed as in urgent or high need of housing. The overall estimate from research by Otago University that there are up to 34,000 people homeless or in insecure or transitory housing. This suggests we need an extra 5,000 units as soon as possible and another 30,000 over a relatively short time period to overcome the highest housing needs. Most of those houses will have to be social houses and most of them will be needed in the main centres of Auckland, Christchurch, Hamilton and Wellington.

The sums do not add up. If HNZC plans to have less houses in three years, it is almost impossible to see how the community housing sector will be able to add the extra 4,000 units urgently needed (a doubling of its current size), let alone take on 8,000 units planned to be transferred out of HNZC.

State House Sell-off – the language of the market

HNZC will be reducing the number of units it owns by 8,000 units to around 60,000 in the next three years. This year (end of 2015) the plan is to transfer 1,000 – 2,000 to registered Community Housing Providers (CHPs). What will happen with the other 6,000 units is not clear. Will they be transferred in 2016 & 2017 and remain as social housing or will they be sold into the open market? It is not clear that there are any social housing providers who could take on that volume of stock in such a short time period.

The Cabinet papers give mixed signals about how the Government understands the target for HNZC transfers market. The Cabinet papers describe CHPs as “organisations such as social support organisations like Accessible Properties, council subsidiaries and more commercial players”. This means that scenarios might include local authorities turning their portfolios into CHPs by combining with existing CHPs or forming their own CHP subsidiaries so as to access IRRS subsidies. It might also mean some very commercial-looking “community” housing providers (e.g. Fletchers Community Housing Trust perhaps?). HNZC’s role is described in Cabinet Papers in highly commercial terms, a “competitive social housing market” with HNZC to become a “high-performing business” in a “contestable market”.

Transfers of houses will retain tenants and subsidies and it is planned to start in areas where demand is “stable” and there are CHPs interested in partnering. The plans is to run an open and competitive tender process in April following consultation in February and they will be looking for “fair value” in transfer prices (see below for details about the consultation meetings).

Housing NZ Redevelopments

A review HNZC is underway to be finalised in the first half of 2015 and expected to yield higher new builds as well as sales in low-demand areas. It is planned to open up HNZC land to redevelopment with the “development of both social and affordable housing on former state housing sites” particularly in Auckland.  The NZ Treasury’s Establishment Unit will manage redevelopment transactions by encouraging social housing providers to build social and affordable housing on HNZC land.

Tamaki is the Model

Deputy Prime Minister Bill English is using the Tamaki redevelopment as the model for his plans. Over the next 10 years around 5,000 extra “affordable and social homes” are planned to be added to the current 2,800 HNZC houses in those Auckland suburbs. The main question remains – how many of those additional houses will be social houses? If most (or all) of them are affordable houses – will they be genuinely ‘affordable’ to low income families to rent or buy?  The formal definition for housing affordability is that housing costs be no more than 30% of household disposable income. For people in South Auckland in January 2015  the median rent is 32.3% of median income and the costs of mortgage 55.5% of median income to buy a lower quartile house at $480,000. A person on the minimum wage or even a living wage will struggle to afford a deposit or mortgage of that size so rent-to-buy, shared equity and other housing assistance would be their only hope.

Binding guidelines on what “affordable housing” means (e.g. housing finance/rents not more than 30% household income) will need to be included in the further redevelopment plans in Tamaki. The goals & aims of the Tamaki project seem indeed very laudable and community agencies in the area are cautiously optimistic that it is improving the situation for people living there – but it is only in the early stages. The experience of the Glenn Innes residents is mixed, and there are some still refusing to move out of the house their family has lived in all their lives. Watch this documentary from Māori Television that follows some of their stories: Whare Tapa Wha documentary.

The redevelopment of the 156 HNZC properties in Glenn Innes will in fact only have half the number of social houses (78) in the area when completed, so there is very good reason to question whether social housing supply will grow at all.


 

Purchasing Plan for Social Housing Services – MSD

“how are we meeting the needs of poor & vulnerable New Zealanders?”

The above quote from the Cabinet papers about how Government should change its ‘messaging’ reads like a quote from any number of NZCCSS documents! It is to be hoped that this change in messaging goes beyond mere words.

The Ministry of Social Development (MSD) is now responsible for assessing people who need social housing and for purchasing the social housing units to house them. They do this by offering an Income Related Rent Subsidy (IRRS) to the housing provider (either HNZC or a registered Community Housing Provider).

The housing reforms are described as having the aim to “reduce social deprivation” but no detail is supplied of how this will be measured or monitored. They also aim to reveal the “true costs of social housing” including costs of improved services to tenants, presumable recognising that quality social housing provision means being both a good landlord and providing additional support where it is needed.

The Ministry of Business, Innovation and Employment (MBIE) is leading the work on monitoring and evaluation of the housing reforms. MBIE has prepared a “baseline monitoring report” with data on social housing supply & demand prior to the reforms and will report on first year of changes to Cabinet in September 2015.

Assessing Need for Social Housing

Since MSD took over the social housing needs assessment process from HNZC, they are claiming improved service delivery: shorter waits for assessment, shorter screening time, and doing more assessments than initially forecast.

NZCCSS would like to hear from those on the receiving end of these services whether they feel service really has improved.

In late February there are now more than 30 registered CHPs who can receive tenants through the social housing assessment process but they have only been able to take up around 130 IRRS subsidies since the July 2014, because they can only receive IRRS for new tenants. This means it will be a slow process to build the number of CHPs receiving IRRS.

Less than 10% (24 out of 272) of tenants whose tenancies have been reviewed by MSD have been able to move. Another 49 people have been “assisted to transition out of social housing”  since July 2014. The small numbers being able to move are more evidence of how tough it is for low income tenants to find private market alternatives. MSD also comments that the effect of moving out of HNZC house into the private market (where IRRS is not available) creates high effective marginal tax rates, as the Accommodation Supplement (AS) is considerably less than the IRRS. This means people’s housing costs rise considerably once they rent in the private market. Almost half of people renting in the private market and receiving the AS need more affordable housing.

Numbers on the Social Housing Register (it is no longer called a “waiting list”) peaked after transfer from HNZC, reaching 5,810 in June before starting to drop again towards the end of 2014 (4,964 in December). This suggests that MSD has been doing a better job at identifying needs and the register may now be a better indicator of real need (or it may simply mean they took a while to get up to speed and people were left waiting longer). A review of the (former HNZC)  social housing needs assessment model (SAS) currently being used is being done and a report is due March 2015.

Some insights are coming through combining the information about IRRS and AS:
MSD believes there are 13,000 (20%) social housing tenants who have potential to move on in the short term.
But nearly half  of AS recipients (136,000 or 47% ) who are private renters require greater availability of affordable housing.
MSD is also looking hard at how it can help to move the other 53% of AS recipients to “greater independence”.

MSD details a range of things being done to “to alleviate pressure on social housing market” including offering “recoverable assistance” for bond, rent in advance & letting fees for alternative housing; doing an additional 3,000 tenancy reviews in next two years; and putting more money into emergency housing and completing a review of emergency housing by July 2015.

 Obtaining Social Housing Where and When it is needed

The detail of the regional breakdown of the housing register is online and the next step is to signal where and how many social housing places MSD plans to purchase to meet its objectives. This “Purchasing Strategy” will go to Cabinet in March 2015 and be published in April 2015.

A Housing Assistance Reform Feedback Group (HARFG) has been formed by  MSD to provide on-going feedback to the Ministry about the reform process. The group has met once in November 2014 and is due to meet again in late February. The small group includes VisionWest CEO Lisa Woolley, Community Housing Aotearoa Director Scott Figenshow, ComCare Housing Director Annette Sutherland & Auckland City Mission Director Dianne Robertson. New members Anne Hurawai (Ngāti Porou), Kara George (Ngāpuhi) and Trevor McGlinchey (NZCCSS) have been invited to join the group for its February meeting.

“Pipeline” of new social housing supply

Social Minister Paula Bennett talks about the “pipeline” of social housing supply and gives the impression of believing there is enough “coming on line”. Looking at actual hard numbers available, it is difficult to share her optimism.

In 2013 HNZC set a target of building 2,000 new units by the end of 2015. By December 2014 it had built only 326 of those and is committed to a further 1,039 by December 2015, so it will fall about 600 short of that target, if it achieves it at all. HNZC says that 88% of the new houses HNZC will build over next 10 years will be in Auckland, Tauranga, Hamilton, Wellington and Christchurch – but it does not disclose how many houses it plans to build over that time.

Over the past three years CHPs have built over 200 houses of a total of 890 funded through $139millon in grants from the Social Housing Unit and the rest are also “in the pipeline”. But the “pipeline” is now running on a trickle with capital funding slashed to only $10million per year for the current and future two years.

Subsidy Instead of Capital Grants: What is the future of the IRRS?

The Government seems to believe that paying a ‘market rent’ (based on the lower end of the rental market) through the IRRS is sufficient basis to enable CHPs to make the multi-million dollar and 30 or more year decision to build social housing. Currently around 62,000 IRRS subsidies are paid (almost all to HNZC) and the plan is to increase this number by 3,200 over the next three years. The intention seems to be that community housing providers will have access to most of these additional subsidies, as HNZC will be reducing its housing stock.

Currently IRRS is only offered to new tenants in CHPs and given the relatively low turnover in community housing groups, without policy changes the number of IRRS taken up by the sector will remain relatively low.

The Government budget for IRRS is however capped and how it is allocated (what areas & types of houses) will be determined by the Ministers of Finance and Social Housing. It will not be in response to overall housing need and will mean changes to how IRRS is defined. Legislative changes are planned to “increase flexibility over what IRRS can be used for” but no more details have been made public.


Public Engagement on Social Housing Transfers

Details of the public meetings being held around the country are on the Treasury website and the final three meetings to take place in March are listed below.

Wed 4 March 2015
2pm to 4pm
ChristchurchAddington Events Centre
75 Jack Hinton Drive Addington
Thur 5 March 2015
11am to 1pm
DunedinFullwood Room
Dunedin Centre
1 Harrop St
Dunedin
Thur 12 March 2015
10.30am to 12.30pm
WellingtonPipitea Marae
55 Thorndon Quay
Wellington

 

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