Growing Social Housing: Working with the Community Housing Sector

When I asked Helen Gatonyi who I should acknowledge today she specifically asked that I acknowledge each and every one of you. I understand Christchurch Housing Forum members have worked incredibly hard to house those in need over what has been a very difficult time for everyone here. Thank you.

Thank you for inviting me here today and giving me the opportunity to share with you the Government’s perspective on housing nationally and here in Christchurch.

Let me start by acknowledging the critical part you all play in the provision of housing.

The serious earthquakes that have plagued this region since September last year and the subsequent widespread damage to housing stock means that access to sound, healthy, affordable housing has never been more important.

Whether you represent a social housing provider or are a property investor the role that you play in delivering shelter to those in need has probably never been more critical.

Since becoming Housing Minister in 2008 I have seen time and time again examples of the compassion, commitment and ability to deliver of social housing providers in particular those who provide affordable, niche and social housing.

It is this commitment and drive that the Government wishes to leverage so that together we can create a housing system that serves everyone according to their need.

At this forum last year I announced the Government commitment to the reforms suggested by the Housing Shareholder’s Advisory Group. I want to spend part of my time today updating you on the progress the Government has made with the implementation of these reforms and I will be very interested to hear your feed back on the process and how you think it has gone at the end of this speech.

A snap shot of state housing in New Zealand in 2011

• 69,671 state homes.
• Housing around 200,000 people.
• More than $15 billion worth of housing.
• Turnover of 9 per cent (approx. 6,000) in 2010/11 as at 31 May
• Dividends taken by Government – the highest, $176 million in 2002, not all of which has been returned to provision of social housing.
• 30,000 three-bedroom homes in a society of fewer ‘nuclear families’.
• 4,800 households paying market rent.
• 4,200 households living in houses that are too big.
• 2,900 households living in houses that are too small (by 2 or more bedrooms).
• 27,000 homes in the wrong place and of the wrong type to meet demand, or in poor condition.
• In the past inadequate measures to locate and deal with those living in state houses without genuine entitlement.
• Inadequate measures and controls to deal with those who abuse their state home or cause on-going distress to their communities.
• No open and transparent pathway for moving people on once a state house is allocated.
• A need for more ‘at scale’ affordable housing alternatives for tenants who don’t ‘quite need’ a state house.
• HNZ Policy team providing advice that often duplicated that of the Department of Building and Housing.

It is interesting to note that in 2007 the total waiting list dropped by only 2000 although 9000 homes had been added to the housing stock by the previous Government. Just adding more houses isn’t the whole solution.

The ‘Options and Advice Service’ is already starting to have an impact on waiting list numbers BUT the numbers of those most in need are increasing.

State Housing – Is it broken?

Despite record levels of investment by successive Governments waiting lists have remained static at around 10,000. Around 3,000 of these are tenants whose need is considered to be very urgent. Referred to as A or B priority.

There are too many homes in areas of low demand and far too few in areas of high demand. In areas of low demand homes are sometimes assigned to C and D tenants assessed as having lower need. In areas of high demand C’s and D’s are put on waiting lists when in reality there is no hope of them ever acquiring a state house.

The state housing model that has evolved since the 1940’s does not meet the needs of tenants in the last ten years nor in 2011 nor going forward into the next 50 years.

Social demographics have changed. The population is aging, there are more single people requiring one or two-bedroom homes and more larger families requiring four or more bedrooms.

There are more than 30,000 three-bedroom homes and not enough one or two bedroom or four or more bedroom homes.

When the Government opened the books in 2008 we saw that the housing stock had suffered from years of neglect – a substantial proportion was old, cold and mouldy meaning on-going maintenance costs were high.  With an insulation programme now in place all will be insulated in two years time.

Housing New Zealand was the first to identify the failings in its system and wanted to make policy changes to enable it to focus on its core business and to do it well. Its tenancy managers on the ground know their clients, and know what it will take to make a meaningful change.

The Solution:

You are a significant part of the solution. Fundamental reform is needed – it is not good enough just to ‘tinker around the edges’.

From the outset we decided that the elderly and disabled should not be adversely affected by any changes.

Yet, this Government was prepared to roll up its sleeves, dig in, get to grips with fundamental problems and sort it out.

First off, an injection of $124 million as part of jobs and growth package to upgrade housing. A win-win. Builders got jobs in the recession, we got tenants houses upgraded and insulated.

Then, last year Bill English and I asked a group made up of social housing and community housing specialists, developers and others from the commercial sector to investigate the issues and to make recommendations on actions the Government could take to remedy the problem.

Housing New Zealand and the Department of Building and Housing have completed a serious amount of work in the twelve months since I saw you last. Both organisations have undergone change to accommodate the reforms we are proposing, both organisations have done this with enthusiasm.

The Jigsaw

Like a jigsaw as soon as we found one solution and put the corners in position the other pieces began to fall into place. As more pieces fell into place the momentum has grown.

Issue one: Had HNZ lost it state housing focus? – It was doing a good job with up to 25 families homed every day, but it wasn’t doing the best it could.

Despite record levels of Government investment waiting lists remained fairly static and critically those most in need were not getting access to a home quickly enough.

No one was more frustrated about this than the HNZ Board and Executive. HNZ staff know their tenants and they were well aware of the issues that needed to be addressed to make the system fairer.

• No transparent pathway to move out those who no longer required a state house and who were capable of living elsewhere.  Some tenants whose personal situations had improved markedly had a sense of entitlement to a state house for life.
• Not enough homes in areas of high demand, meaning tenants in most need, the A’s and B’s, could wait for long periods before being housed
• Too many homes in areas of low demand. The investment was not being used to best effect
• Homes are over or under-occupied.

The Solution

Understanding the problem

Bill English and I appointed the Housing Shareholders Advisory Group and asked them to report back on the issues facing the provision of niche, social and affordable housing. The Groups reports, ‘Home and Housed a vision for Social Housing in New Zealand’ and the subsequent Summary of Stakeholder Feedback laid the foundation stone for the Governments changes.

JIGSAW Piece One - HSAG

Their vision and 19 recommendations was underpinned by four imperatives:

• Empowering HNZC to focus on the ‘high needs’ sector
• Developing third-party participation
• Investigating initiatives across the broader housing spectrum
• Clarifying sector accountabilities.

Issue two: Management of the State Houses themselves
Too many houses of the wrong size in the wrong location or in the wrong condition to meet housing need. Also houses with a disproportionate financial value compared to the use being made of them. Since July 2008 HNZ has sold 24 state properties valued at more than $700,000 realising more than $19 million which has been reinvested in areas of greater need.

HNZ has more than 30,000 three bedroom homes (nearly half of its entire stock) a reflection of the time when the typical nuclear family unit consisted of mum and dad and two kids.  These days our aging population demands more one and two bedroom homes and larger extended families require four or more bedrooms in a property.

JIG SAW piece two – More focussed management of HNZ Assets

Better management of the state housing asset - HNZ will divest surplus housing stock that is the wrong size or in the wrong place to meet need and will invest in more homes of the right size and in the right location.

HNZ will embark on a programme of building, buying, leasing, selling and renovating homes to reconfigure its portfolio to meet need. A side benefit of this programme will be newer housing stock and a reduced maintenance bill.

HNZ is unlikely to pull out of an area altogether - where there is a genuine need they will continue to provide state housing. There may be a case for other providers of social housing to step in, in some instances, to lease, buy or takeover surplus state housing stock. HNZ will work closely with the new Social Housing Unit (SHU) currently being set up to identify these opportunities.

It is worth noting that the Government’s one off contribution of $124 million has resulted in significant improvements to the state housing stock which not only significantly improved living conditions for tenants but will have an enduring effect on on-going maintenance costs.

JIGSAW Piece Three
Empowering HNZ to focus on the ‘high needs’ sector.

The Government and HNZ want to deliver a fairer state housing system that delivers state housing to those most in need for the duration of that need.

To achieve this they will introduce reviewable tenancies.  All new tenants entering a state house on or after 1 July 2011 will be subject to a reviewable tenancy, involving an assessment of their household circumstances every three years.

After three years, assessments of tenants who are elderly or those who are disabled, will be no more than desk top reviews as it is unlikely that their circumstances would change markedly and we don’t want to worry them.

Where circumstances do improve, tenants will be assisted to move into the community housing sector or the private sector with perhaps an Accommodation Supplement – freeing up state houses for new tenants on the waiting list.

Setting the rules

HNZ is getting firmer with those who break the rules. Tenants who provide false information about their personal circumstances are being held accountable.

Tenants who abuse their home or create a nuisance in the neighbourhood are being dealt with more swiftly.

HNZ will implement a suspension policy on 1 October which will prevent those who have had to leave their state house from reapplying for another state house for at least a year.

- In addition to 90 day notices, the table also includes the number of houses that were freed up as the result of an investigation when the tenant vacated voluntarily or when the Tenancy Tribunal ended the tenancy.

These measures free up more homes for those most in need.

Issue four. What happens to those people who are not eligible for a state house? What happens to those people whose tenancies are reviewed whose circumstances have improved markedly and who don’t really need a state house at all?

JIGSAW Piece four - Assessing Housing Need

From 1 July, Housing New Zealand will start using improved criteria to decide who gets in to state housing. All applicants will be recorded on a housing need register. Only those in the greatest need (A and B priority applicants) will be eligible for state housing, and will make up the Housing New Zealand’s waiting list.

Those with lower housing needs (C & D priority applicants) on the housing need register will not be part of the waiting list, and instead will be helped in to other types of housing through Housing New Zealand’s Options and Advice Service.

Options and Advice as at 31 May 2011 (Year to date)
NB – People can apply for more than one option.

• Applicants, other than those in the most urgent need who will bypass the service and go into a state home, will go through an options and advice service. 
• This service has been successfully tested by HNZ already and gives staff a chance to explore all of the options available to a housing applicant. Those assessed as A or B, very high or high need, will go on the waiting list.
• C and D’s already on the waiting list prior to July 1 will have the option of staying on the list or going to the Option and Advice service.
• Those assessed as C’s and D’s after 1 July will no longer be eligible for a state home. Once they would have languished on the waiting list with no real chance to get a home, especially in areas of high demand with no other assistance available to them. Now they will now have access to the Options and Advice service – helping them to find accommodation alternatives, including in some cases home ownership. We see this as a positive!
• Depending on the success of reviewable tenancies and the growth of other providers of social and affordable housing we are likely to roll this out to existing tenants if the National Government is re-elected.
• However, existing tenants who are elderly or disabled will not go onto reviewable tenancies. Perhaps if they are single and in a very large state house they will be given the option to shift into a smaller one, but that’s it. They need certainty.

Developing third-party participation
Issue five - The Government cannot provide all niche, social and affordable housing on its own - but past attempts by Housing New Zealand to engage with third sector providers of this type of housing haven’t delivered social housing on the scale that is needed.

We need more social housing in New Zealand so we need you to grow.

Third sector providers of niche, social and affordable housing including iwi and member groups of Community Housing Aotearoa, like the Salvation Army and Habitat for Humanity have said they are ready and able, with the appropriate levels of Government support to step up and deliver more social housing.

Jigsaw Piece Five – the Social Housing Unit

A decision was taken to separate the provision of funding to the third sector from HNZ for several reasons – firstly because the HSAG believed that a specialist unit with a more commercial focus on the provision of social housing would be more efficient and cost effective.  Having an independent, specialised unit was also important, and we wanted to free up Housing New Zealand to focus on its core business as a social landlord, providing state houses for those in greatest need, for the duration of that need. 

The aim of the SHU is to get much more of this affordable housing delivered to a range of families along the housing continuum. We anticipate its focus will be more commercially based, getting ‘the best bang for everyone’s buck’. The final look of the SHU will be designed by the people employed to run it, with advice to Ministers from the sector on pace and direction. However I expect it will address issues including the quality of social housing delivered, security of tenure, good tenant management, governance and protection of the Government’s investment.

As well as continuing to work with the type of niche providers that successfully delivered housing under HNZ’s Housing Innovation Fund, the SHU will need to develop partnerships, allocate funding and develop strategy to support the growth of social and affordable housing at scale.  To do this it will have more cash, the option of land transfers and sale or lease of surplus housing stock. 

Although HIF projects have successfully delivered up to three dollars worth of housing for every dollar invested, it has been more costly to administer than it needed to be, for example by including peer reviews by architects and town planners for applications. 

The SHU is going to need to make some big decisions and get itself on track quite quickly.  To ease this process we will initially appoint a Ministerial Advisory Panel, to oversee its development and advice on the progress of our social housing reforms.

Issue six – The Money

Jigsaw Piece Six – Social Housing Fund
The Government is committed to growing ‘at volume’ provision of niche, social and affordable housing by the third sector.

In this budget, despite constrained economic times, we are investing $40 million for the new Social Housing Fund.

This figure is almost double the investment that the Government made into support the growth of Social Housing last year ($40Million this year as opposed to $25million last year). 

The money will be divided between the following groups – but with a lot more flexibility to support good initiatives that will deliver critical niche housing at one end of the scale and volume social and affordable housing at the other.

An additional $5 million has been set aside for the Tamaki Transformation project which should also impact positively on the volume of niche, social and affordable housing.

We expect the SHU to have far lower administration costs – it will be a relatively small, tightly focussed team – the cost of running the SHU is expected to be less than half the administration costs of the previous HIF fund alone, and of course its work will be much broader in scope as well as larger in scale and impact.

DBH, which is already responsible for broader housing policy, has taken over the social housing policy role formerly held by HNZ, cutting duplication and making substantial savings. 

We are currently working to a four-year budget plan that aims to see dividends taken from HNZ reinvested in to the provision of social housing via the SHU.  Historically, successive Governments have annually taken large sums from HNZ as a dividend for the consolidated fund. In 2002 for example, 176 million was torn out of HNZ as an annual dividend, put into the consolidated fund and spent on everything except housing.

HNZ is committed to working closely with the SHU especially when it comes to its asset management policies.

Summary
We have come a long way - however there are still some issues that need to be resolved.

Jigsaw piece seven

For instance we are working with MSD to identify whether there is some middle ground between the Income Related Rents and the Accommodation Supplement that would assist tenants moving into social housing provided by the third sector. You are aware that MSD is also initiating a huge change programme at the moment and this is being considered as part of that.

How will we know if we have succeeded?

• Those A’s and B’s in the most need will get access to a state house that is the right size, is in the right location and is in the right condition to meet their need for the duration of that need. And they will get a house within a decent time frame.
• The volume of homes leased owned and managed by HNZ and the third sector combined will increase significantly.
• We will see more people progress along a housing continuum, from state housing to niche social housing or affordable housing, then to private rental and in some cases from there into home ownership.

Let me turn to the problems that are unique to you here in Christchurch

Christchurch housing situation

Recent announcements by the Prime Minister and Earthquake Recovery Minister Gerry Brownlee have given many people a clearer picture of what their future holds.

It also provides options for those homeowners in the worst affected suburbs which will allow them to get on with planning their future. 

CETAS
People who need alternative accommodation  because their homes have been badly damaged by the earthquakes are already being matched with suitable housing through the Canterbury Earthquake Temporary Accommodation Service (CETAS), and CETAS will continue to provide this service as repairs and rebuilding gets underway. 

The first priority has always been to use available stock in the private market, and CETAS has so far helped 241 people into accommodation in the private rental market. More than 300 landlords have registered rental properties with CETAS so far.  CETAS also uses Trade Me and other rental supply information to identify suitable properties for temporary accommodation.

Temporary homes and villages
It’s important to give people options that meet their particular needs. For example, some people may only need short-term accommodation for a few months while their homes are repaired or rebuilt. Others may prefer to stay close to their community rather than rent a house in another area.

Portable homes and villages will provide further accommodation options, and the Department of Building and Housing is working with Christchurch City Council, Waimakariri District Council and others to supply these. 

This is a major undertaking in an environment where there is a lot of uncertainty. The aim is to make sure homes are available if and when people need them.
Three temporary accommodation village sites have been confirmed – Linwood Park, Rawhiti Domain, and Kaiapoi Domain in the Waimakariri District.  

22 units (a mix of one, two, three and four bedroom units) are nearing completion on Kaiapoi Domain.  The 41 units at Linwood Park are due to be completed by early August, and open home events are planned there on 10 and 17 July.  Site works won't start at Rawhiti Domain until demand is clearer.

Local Canterbury-based firms have been engaged to design, build and operate the temporary accommodation villages. Specifically a consortium of Hawkins Construction, Spanbild and Fulton Hogan. The temporary homes are being built to current NZ Building Code standards.

The temporary accommodation villages will be available to people in the red zone and households who need to move out of their homes for several weeks or months while their homes are repaired or rebuilt.  They are not a permanent housing solution.

Temporary accommodation villages will be in place for as long as the rebuilding of Canterbury requires. At this stage it is anticipated that they will be needed for up to two years.

Temporary housing takes time to establish, and so the Government has had to make decisions ahead of having absolute clarity around demand. Because of this we are taking a phased approach and building in the flexibility to adjust supply. 

Market rental
Rental costs for this temporary accommodation have been set at comparable market rents, and people will pay their own utilities as they would in the private market. This is about providing additional options for people whose homes have been severely damaged by the earthquakes.  It's not about undercutting private landlords. 

To be eligible for the government supported temporary accommodation options via CETAS, homeowners or people in the private rental market will need to provide evidence that their home is uninhabitable - for example if their home is in the red zone, or if they have a red or yellow sticker, or evidence from the Council or their insurer.

Changes to the Building Code
As rebuilding gets underway in Christchurch, it will be important to ensure new homes and buildings are better able to withstand any future severe earthquakes.  Changes were recently made to the seismic hazard factor for Canterbury based on the best scientific and structural engineering advice available.  As a result, residential homes built in the future in the greater Christchurch area will need to have increased bracing and foundations that will be more resistant to bowing and cracking. 

Additional changes may also result from the Department of Building and Housing's technical investigation into collapsed buildings and the Royal Commission of Inquiry.

The Department is also preparing engineering guidelines for the repair and rebuild of houses in the residential green zone, and this information is expected to be available by mid July.

New Unit Titles Act now in force
The Unit Titles Act 2010 which came into force on 20 June 2011 may also be useful as repairs and rebuilding get underway in Christchurch.

Changes under the new Act include a reduction in the voting threshold to 75%, which will make it quicker and easier for the body corporate to make decisions.  Following an insurance claim, for example, the body corporate can more easily decide whether to rebuild/repair, or to pay all the unit owners out. 

As new buildings are built, it will also be much easier to set up unit title arrangements in future, whether for medium density apartments or mixed use developments, for example. 

This Government has consistently said we are committed to the people of Christchurch and to rebuilding this region.  The last nine months have been unbelievably tough, and I'm full of admiration for the work that's being done here to prepare for a better future.

You may be interested to know HNZ have 183 houses in the red zone and 283 in the orange zone, so they will continue to work with many of these families over the next few months to ensure they are moved to alternative comfortable housing.

Thank you once again for giving me the opportunity to meet with you today.

I am now happy to take any questions you might have.