Sole buyer of Invercargill state houses pulls out, stalling Government plans

MAARTEN HOLL/Fairfax NZ

Bill English talking about Auckland's housing market at his post-Budget breakfast.

The Government's plan to transfer state houses to a non-government player in Invercargill is in disarray after the lone potential buyer pulled out.

The PACT group has withdrawn from the process to buy and manage 348 Housing New Zealand houses in the city "after the group decided the transaction wasn't the best opportunity for them to achieve their aspiration of providing services to the community", Housing Minister Bill English and Social Housing Minister Paula Bennett said in a statement.

"PACT was the only party invited to submit a proposal for the Invercargill transaction so we have put this procurement process on hold until we can assess other options," English said.

Finance Minister Bill English details housing initiatives in his 2016 Budget.
JEFF TOLLAN/FAIRFAX NZ

Finance Minister Bill English details housing initiatives in his 2016 Budget.

Bennett said she was disappointed PACT had pulled out, but "their decision should reassure social housing tenants that the process is robust and that interested parties have enough information to make the best decision for themselves and the tenants".

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"The procurement process for the 1134 properties and tenancies in Tauranga is still underway and progressing well."

PACT's executive team said in a statement they were pulling out of the sale because they felt it was not the best opportunity for them.

"PACT remains interested in social housing as it continues to be an area where our clients require our assistance. We will look to pursue other opportunities as they arise."

Invercargill mayor Tim Shadbolt said PACT's decision to pull out meant it might be time to re-consider a proposal by the Invercargill City Council to purchase the homes directly or through a council-owned trust at a peppercorn rate.

The council had previously proposed buying the homes at a reduced rate, Shadbolt said, and would have been able to use extra money to install double glazing, insulation and heaters in the homes.

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"Then at least the Government doesn't have to worry about them," he said.

"I don't think they want to be landlords. But we've got to get people into warm and healthy homes."

Shadbolt said he was also afraid if the homes were not sold, they could end up like several former schools in the city.

In 2011, Shadbolt called unused former school sites "rotting corpses". He said the situation was a "nightmare" for neighbours.

"I don't want to see that history repeated."

Greens housing spokeswoman Marama Davidson said the PACT pull-out was another blow to the Government's "flawed plan to rid itself of responsibility of state homes and their tenants".

"This risk now is that Bill English is going to want to sell these houses off at bargain-basement prices, for far less than they're worth, just to make his sell-off scheme look like a 'success'."

She said he should take the hint and take the houses off the market.

"New Zealanders do not want our state houses to be sold off while we've got people living in cars and garages, and while there's 4500 people on the waiting list for a home."

Labour spokesman Phil Twyford said this was the second example of a big community housing provider pulling out and it was time for the Government to cancel the whole sell-off and go back to the drawing board.

"It is grotesque to be flogging off state houses to overseas companies when Kiwi families are living in cars and garages. On top of that, the Government's sales process has driven out local community housing groups, leaving the field open to merchant bankers and offshore companies."

Community housing providers saw the sales process is bureaucratic, risky and expensive, Twyford said.

Invercargill National MP Sarah Dowie​ said she was disappointed PACT had pulled out.

"It is disappointing, but at the end of the day they had to make a decision that fit with their ethos."

The needs of tenants in the state houses remained her primary concern, Dowie said. 

She said she and the Government were committed to "finding the right buyer that's the right fit."

Southland District mayor Gary Tong said he was also disappointed.

"Hopefully it will be an opportunity for someone else to step in."

Invercargill Social Housing Action Group chair Rachael Goldsmith, who had campaigned against the sale of the state houses, said the fact PACT had pulled out should be a signal to the Government.

"They just need to get the idea this isn't going to work," she said.

"They definitely need to leave things as is and focus on serving tenants."

In their statement English and Bennett said the Government had a wide range of work underway to expand the community housing sector and was committed to transferring between 1000-2000 properties to "registered community housing providers" this year.

A proposal was being considered for the Horowhenua District Council to explore a joint transfer of council flats and HNZ properties, totalling 365 properties, to a community housing provider.

English said local iwi would be consulted.

Meanwhile English has stepped up his pressure on local councils to allow more houses to be built, warning again that if the Auckland council does not provide for greater development through its Unitary Plan the Government would step and force the issue.

He said it was clear after recent Labour announcements calling for the rural urban boundary to be removed that there were the votes in the House to step in.

"We don't want to get ahead of ourselves here. They have a process which we respect which they are going through."

But National and Labour had said the same things about the boundary, and similar things about supply being a problem. So there was "a bit of a build up of a political consensus" and that was shared by the local council. It was his preference that it did not come to Parliamentary action and it was better that the council made good long run decisions.

The Government was thinking through when it might act, but it would take a considered approach.

One influence would be what the market at large thought about the plan. "The change in house prices is one measure of how the planning system works now and it'll be a more formal measure in the future."

He also warned property values were not a one-way bet.

"I don't think this time it's different, which is still being argued in Auckland."

People were placing their bets as if prices would continue rising and the cycle would not end, but it would.

"Even Hong Kong prices are dropping. They are not just levelling off they are dropping, and they are on the doorstep of China and in theory should be permanently overwhelmed by the tsunami of money because they are a train journey away, one click on the computer."

 - Stuff

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