Hawke's Bay Property Investors' Association

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22-10-2015

Paula Bennett on tenancy reviews, resetting expectations and fostering community ownership

Tenancy Reviews

 
Reviewable tenancies mean we’re no longer putting people in social housing and leaving them there. 
 
It’s another significant way we are enabling people to take charge of their own lives and move along that housing continuum into housing independence. 
 
Since July last year, over 2,500 people have or are currently engaged in the tenancy review process.
 
Of these, 257 tenants have moved into private rental accommodation. 
 
And 26 tenants have purchased their own home.  
 
Most of these people had never even considered home ownership was within their means. 
 
All we had to do was ask! 
 
I think it’s an outstanding result and I’m thrilled each week when I see that number grow.  
 
Yes, tenancy reviews can be unsettling, and it absolutely requires sensitivity and care. 
 
But we don’t think it’s good enough that people who do not need to be in social housing are taking up properties when there are literally thousands desperate for those homes.   
 
 
Resetting Expectations
 
I’d also like to talk briefly about our expectation that there are clear reciprocal obligations for those interacting with the social housing system. 
 
I’ve talked before about how in the last year, 414 times we’ve offered someone a property, it was turned down, including for reasons we don’t think are good and sufficient, like birds chirping in the trees next door, wanting a bigger back yard for a trampoline, and not liking the colour a door was painted.
 
This includes people currently housed who wish to transfer to a different property. 
 
Not only does it create extra work for both Government and your organisations, but worse, it means another family in desperate need has to wait even longer for a property to come available. 
 
Let me be clear – there absolutely are good reasons people can decline a property, like not wanting to live close to an abusive ex-partner. 
 
Our social housing system has been passive for so long, that there needs to be a rebalancing in how clients interact with providers and what is acceptable behaviour. 
 
Cabinet is currently looking at decisions to change this. 
 
While the Government is committed to its obligation to house vulnerable New Zealanders, actions have consequences. 
 
We’re sending a clear signal that it is not OK for your and our time to be wasted, and for other families to be made to wait for a home. 
 
 
Fostering Community Ownership
 
Thirdly, and most importantly to all of you, we’re committed to helping providers like you grow. 
 
Ladies and Gentlemen, it’s a development I am particularly excited about. 
 
As we have previously stated, Housing New Zealand will remain by far the largest provider of social housing in New Zealand for the foreseeable future. 
 
But we know from talking with you and getting out into towns and cities across the country that communities are eager for a bigger stake in providing housing for their most vulnerable. 
 
This is a Government that is absolutely right there with you. 
 
What we’re talking about is the most fundamental change in social housing arguably since it was formally established in the 1930s. 
 
But don’t you think it’s time to deliver housing differently? 
 
Everything else about New Zealand has changed in the last 85 years. 
 
Between the number of people waiting for a house, or housed but able to move into independence, to the stark reality that our portfolio barely meets the needs of today’s tenants, it is clear that change is long overdue. 
 
I’m excited because this isn’t just about your growth for the sake of it. 
 
It brings the potential for some really innovative thinking in the way you provide both housing and support services around the tenants. 
 
Over the past year, I’ve opened some amazing Community Housing Provider developments, including one in Johnsonville for disabled people which was designed with their particular tenants’ very challenging needs in mind, and well linked up to the intensive ongoing social services they need. 
 
Trust me, I’d love to be cutting ribbons every week, and not because it’s a great photo op for a politician!
 
I genuinely want to see more social housing being provided by organisations like those represented here today. 
 
But I am concerned there remains an expectation that large scale capital grants is are only way to kick-start further growth in the sector. 
 
It is quite simply not a sustainable way to grow. 
 
The Government wants to be working with organisations that are sustainable in the long term.
 
One-off capital grants up front aren’t the way to achieve that.
 
Instead, you are going to need to be commercial to be sustainable. 
 
That will mean looking at ways to build your balance sheet and your financial capability – or forming a consortium to get it.
 
This could be working with iwi, other Community Housing Providers, larger financiers, or companies with large-scale asset management expertise. 
 
The Government has signaled that we expect providers of all sizes to be seriously looking at all options to build a sustainable business. That’s what will be needed if we are to achieve the goal of more community ownership of social housing. 
 
Just this week, three Tauranga iwi authorities announced they are forming a consortium with Masterton Trust House to bid for the transfer of social housing in the Tauranga area.
 
I understand the complexity and scale of this change can seem daunting, and that working with others in this way is novel. 
 
But Government itself has had to take a good look at itself and ask whether our systems are fit for purpose to serve you and your tenants. 
 
And in a lot of ways, we weren’t, because our systems were designed for a time when Housing New Zealand was a monopoly provider. 
 
So how have we changed? 
 
We’ve opened up the Income Related Rent Subsidy to non-Government organisations. 
 
We’ve made the Ministry of Social Development’s purchasing intentions public, signalling clearly to providers where demand is expected to grow, remain static, and decrease, giving you the clearest picture yet about where there are opportunities to focus investment and community support. 
 
This information is freely available at socialhousing.govt.nz, and if you haven’t had a look at it, I encourage you to do so. 
 
We’ve also introduced long-term contracts so providers can have that certainty of a guaranteed income stream over 10, 15 even 25 years. 
 
Long-term contracts can provide stable and sustainable growth for a Community Housing Provider. 
 
The opportunity here is immense. 
 
We are offering you a double A rated, Government-guaranteed investment product. 
 
If we took something like this to the open market, investors would climb over broken glass to grab long-term rental contracts. 
 
In return for the reliability of ongoing Government investment, banks and financiers can see new opportunities for investment in a sector that previously didn’t exist.
 
This helps you grow your own assets over time.
 
I like to think of it this way…It’s similar to how thousands of New Zealanders take out mortgages on their own homes.  
 
In those cases, the bank provides significant upfront funding to help buy a home that would otherwise be out of reach.  
 
At the end of the day the mortgage is paid off and kiwi Mums and Dads own their home.
 
In your sector, the Government provides a long-term income stream via the Income Related Rent Subsidy to give banks and financiers confidence to invest in the social housing your organisations will provide for people who need it.  
 
Financial institutions constantly tell me how favourably they see this long-term Government-backed income stream, unlocking the possibility of expansion through reduced rate borrowing and leveraging your growing balance sheet.  
 
I understand dealing with this has been a challenge for many of you, but I know you can see the potential. 
 
We’re also progressing with potential sales of existing state houses in Tauranga and Invercargill. 
 
This creates the potential for an immediate increase in capital assets, and is another foundation on which further growth can be realised. 
 
We announced yesterday we’re proceeding to the Expressions of Interest phase, and I want to say we value the consistent feedback we’ve received from you throughout this process.
 
We’ve also signalled clearly we are looking for community input to identify further opportunities for social housing growth. 
 
Treasury has an open Request for Information to enable potential providers and developers to submit ideas for the supply of new social housing or the transfer of existing social housing. 
 
I’m pleased this has already seen strong interest from the sector. 
 
We’ve received a number of good ideas on where and how transfers might take place beyond Tauranga and Invercargill.
 
I know from speaking with some of you how positive you are about our announcement that 20 per cent of vacant and underutilised Crown land in Auckland will be set aside for social housing, with a further 20 per cent set aside for affordable housing. 
 
And because a lot of the work is focused in Auckland, we now have decision makers from both MBIE and the Ministry of Social Development on the ground there, ready to work with you on a day-to-day basis. 
 
I’m often asked to put a figure on how big we’d like to see the community housing sector grow. 
 
I’m reluctant to for good reasons, because the last thing you need is an artificial target from one Minister hanging over you. 
 
The answer of course is I’d love for us to be talking about oversupply, especially in high-demand areas so that people have real choice. 
 
Victoria, Australia provides an indication of the direction we should be heading, where its community housing sector went from 0 per cent to 30 per cent over 10 years. 
 
I am under no illusions as to that being an ambitious goal, but quite frankly, New Zealanders expect nothing less from us.  

Read the full speech here

Tags: social housing

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