Social housing accord could see rents drop
A new entity the city council is setting up to drive the provision of affordable housing in Christchurch could lead to millions of dollars in extra revenue for the organisation and a drop in rent for some people in social housing.
The new entity is being set up by the council as part of a Housing Accord with the government and will be structured so that it qualifies as a community housing provider, meaning it can attract the new income-related rent subsidies.
Introduced this week the subsidies allow community housing providers such as churches and trusts to charge their tenants no more than 25 per cent of their income to rent social houses because the government then tops up the difference to the market rent of the house.
Currently the council misses out on the subsidies because it is expressly excluded as a community housing provider, despite being the second biggest landlord in the country.
Deputy mayor Vicki Buck told The Press the new entity would allow the council to get around that exclusion and potentially access millions of extra dollars in revenue from the government.
Once the entity was set up the council could lease to it all or part of its social housing stock.
If that happened the council could then expect to receive between $10 million and $18 million a year from the government in rent subsidies – money which was desperately needed as currently rents were not covering the cost of the council’s social housing operation so it was having to dip into its reserves.
Buck said there would be benefits too for tenants, some of whom could see their rents drop.
The proposed new housing entity would be 49 per cent owned by the council and would be set up using $50 million in funding from the council’s investment arm, Christchurch City Holdings Ltd.
It would act as a catalyst by encouraging private investment in housing developments.
It might, for example, help bank-roll developers who wanted to build affordable homes but needed an initial cash injection to get their project off the ground by pre-purchasing a portion of the homes in their development.
It would then rent those homes out while there was a rental problems and then look at selling them.
The council’s partners in the entity were likely to be other community housing providers and non-government organisations and it would not be expected to return a financial dividend.
"The dividends are social, not financial," Buck said.
In addition to the new entity, the Housing Accord also establishes a Joint Housing Steering Group that will report monthly on the progress of residential building in Christchurch.
It will also monitor how the regulatory environment and the implementation of the Land Use Recovery Plan is impacting on development.
As part of the Accord, the Government will also invest $75 million into the construction of 180 new homes on two council-owned sites in Sydenham.
Initially the new Sydenham homes will act as temporary accommodation for residents getting their earthquake damaged homes fixed. Later they will be sold as affordable homes on the open market.
*The Housing Accord is still subject to ratification by full council, based on the outcome of consultation with residents on whether the council should be involved in the affordable housing market.