Mike Butler: Tribes first up for social housing

New tribal corporations appear to have the first right of refusal for all state houses the Government plans to sell because such rights to surplus Crown properties have existed in treaty settlements back to the Waikato-Tainui deal in 1995.

Housing was the main subject of Prime Minister John Key’s state of the nation speech last week. A proposal to sell between 1000 and 2000 Housing New Zealand properties over the following year for use as social housing run by approved community housing providers was the standout among five proposals that included:


• Increasing the social housing budget from 62,000 income-related rent subsidies a year to 65,000 subsidies by 2017/18 with a focus on Auckland.

• Move around 3300 Housing New Zealand tenants who earn too much into private rentals.

• Fewer state rentals in some regions of less need and more, especially one-bedroom flats, in Auckland.

• Help increase the supply of affordable housing for people to buy, especially in Auckland, utilising Housing New Zealand land.

Key carefully explained that ‘we talk about “social housing” rather than “state housing”, because you no longer have to live in a state house to get a high level of government housing support’.

But social housing is for people with low incomes, with no cash assets, with numerous dependents, and with a high housing need, and includes those with mental health issues roaming the streets since the large “mental hospitals” were closed.

The phrase "high housing need" is code for "no one will rent to them" and includes those who smash holes in walls in fits of anger, who steal stoves, hot water cylinders, and copper spouting, and are better housed in buildings with concrete walls, steel doors and with an on-site manager.

So in a social-housing-to-iwi deal the government may think Maori organisations are best to cope with large numbers of low-rent Maori tenants and tribal corporations would see it as yet another cash cow.

One tribal corporation keen on the deal is Ngati Whatua of Auckland. Chair Philip Davis says the hapu has owned and leased one hundred homes to Housing New Zealand since 1996, as part of the settlement of its claim to what was a large state-housing area.

If the government sells housing to tribal corporations at a discounted rate then leases it back the government would retain the management burden and costs and lose the asset value while the tribal corporation would gain the asset plus free cash flow.

Private social housing providers, such as the Monte Cecilia Trust in Auckland, receive an income-related rent subsidy which is the difference between the value of the income-related rent and the market rent rate for the property. For instance, if the market rent “as agreed with the Ministry” is $300 a week and if the income related rent “as calculated by the Ministry” is $120, the income-related rent subsidy is $180.

This differs from an accommodation supplement, available to any owner of rental property, to help people with limited income to pay 70 percent of accommodation to a maximum that varies according to region and household size. For instance, if the market rent is $300 a week, the accommodation supplement could be $210.

In the clamour about housing, whether social or affordable, there are a few basic facts:

• Cheap housing creates a long waiting list. Mostly there is not a housing shortage in New Zealand although there is some shortage in some areas of Auckland and Christchurch.

• Overcrowding often results when people are evicted for non-payment of rent or when families combine to get cheaper rent, and no property owner wants overcrowding because more people means more damage.

• Around five percent of renters are those who damage property, don’t pay rent, and require constant supervision.

• The current government is removing or destroying perfectly good buildings at huge cost when a long line of private investors would happily buy these and fill them with tenants who pay rent and care for their homes.

• If a $25,000 sixties weatherboard home sits on a $1-million Housing New Zealand section, certainly move the old house and put a million dollar home there.

• The best outcome for suburbs with sixties weatherboard state houses is for first home buyers to spend $100,000 on a house there instead of $400,000 for one in a more salubrious area, do it up, and get on to the property ladder. That would both clean up the house and clean up the area. Those areas are quite nice once you get to know them.

• There should be no question that the 3300 wealthier Housing New Zealand tenants should move on to make way for those more-needy.

The current government could be making a big mistake in its rush to off-load state houses to private social service providers. Taxpayers will lose a valuable asset which could be profitable and renters in the too-hard basket may be required to rent from providers with no experience in the sector other than receiving free stuff from the government.