City plans to restructure social housing
The Christchurch City Council is thinking of setting up a new company to manage its social housing portfolio. Deputy Mayor VICKI BUCK explains what is proposed.
The Christchurch City Council has been in social housing since 1938 and is now New Zealand's second-largest landlord, but social housing has never been a charge on rates.
However, the way it has worked for the last 75 years won't work in future. The city has lost about 600 units, including 113 in the residential red zone. Rents no longer cover the costs of repairs and maintenance and the necessary rebuild of the houses. There is an annual shortfall of about $3 million.
Even if we get our total housing insurance payout there will still be a shortfall for all the necessary repairs and rebuilding.
So we need to think about what we do to ensure we have warm dry homes for people who need them most without in any way adversely affecting ratepayers.
What we are proposing aims to make our social housing sustainable and viable and allows us to develop good homes in good communities and derive a great deal more revenue, but not from tenants.
As part of the draft housing accord with the Government we can create a new entity - probably a company which the council will own 49 per cent.
We can then register this as a community housing provider under the new rules that came into being in April this year. This new entity can then qualify for the Government's new IRRS (income related rent subsidy) and this will mean an additional rent subsidy from the Government of about $10m to $15m a year.
The city council does not qualify for this rent subsidy (despite many requests and submissions) if it keeps doing things the same way. Given there is only $1.8m left in the social housing account this provides a powerful incentive for a changed structure.
Under this new structure, the council would lease its social housing to the new entity. For each social housing tenant who qualifies for the IRRS, the new company would receive from the Government the difference between the actual market rent and the rent paid by the tenant.
This would be substantial revenue and would be enough to enable us to continue, rebuild and repair our social housing without any charge on rates. It also provides a great base to keep building on the provision of housing for those in need. And at the moment that's a lot.
The other participants in this new company would be other community housing providers who have similar goals of ensuring great social and affordable housing. Together we can use the housing in a much better way for tenants and actually redevelop and rebuild where necessary.
It could also act as a catalyst to the private sector to get them to increase their build of affordable and social homes.
The draft housing accord means that the Government, which is the country's largest landlord, the city council which is the second largest, the community housing providers and the private sector can all work together to tackle Christchurch's serious housing problem.
The private sector will be doing the building and this offers a great chance to drive innovation and cost reductions into the home building sector.
We know the drastic shortage of quality affordable rentals in Christchurch post the earthquakes. We know there are about 11,000 fewer homes than there used to be and we know how hard it is at present for anyone to find a place to live.
We also know that predictions are rents will keep going up for some time yet. We know too that kids living in garages is not OK by any standards and that housing is one of the key determinants of children's health and education outcomes.
We know we have many workers coming into the city for the rebuild and that we aren't even at full throttle yet. They all need somewhere to live. And they can't come and help if there is nowhere for them to live.
We are keen to bring rents down and make homes available. We think that will only happen by concerted action and that's why this approach joins up the dots between the Government, the council, the community housing groups and the private sector.
This proposal is out for public consultation at the moment. It means that as a community we can keep social housing maintained and repaired and developing without a charge on rates. We think it's a good solution to a difficult problem.
Public consultation on the council's proposed restructuring of its social housing portfolio is open until June 26. Visit ccc.govt.nz and click "Have your say" to find out how to make a submission.