6 Feb 2015

Warning of risks in state housing revamp

5:31 am on 6 February 2015

The Government has revealed more details of its plans to sell thousands of state houses and transfer more responsibility to community housing providers.

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Photo: RNZ

Last week, Prime Minister John Key announced plans to sell up to 2000 of the country's 69,000 state houses in the next year.

Cabinet papers from December - prepared by the offices of the Minister of Finance Bill English and the Minister for Social Housing Paula Bennett - which were released by Treasury late yesterday show that overall, Housing New Zealand will shed up to 8000 properties by 2017.

The Government said access to affordable housing would increase as community providers boosted their capacity.

But the papers also outlined major risks, including the need to ensure community providers were financial sustainable and that tenants were protected against unfair treatment.

Officials also conceded there were still "uncertainties" about how much the state house sales would net and the cost to taxpayers of widening the income-related rent scheme and other subsidies.

Ministers were also encouraged to steer the public conversation away from "how many state houses are there?" to "how are we meeting the housing needs of poor and vulnerable New Zealanders?".

Six public meetings will be held over the next two months before the Government announces which which areas it is considering for state house sales at the end of March.

Regional consultation with community housing providers and iwi will begin in April and Ministers expect to kick off commercial negotiations in June.

Meanwhile, thousands more Housing New Zealand tenants are set to have their tenancies reviewed under plans by the Ministry of Social Development to cut the waiting list for state housing.

As of the end of last year, there were more than 5000 people on the waiting list, of whom 3600 were assessed as "high need".

The Ministry of Social Development, which took over management of the state house waiting list from Housing New Zealand in April 2014, said it was on track to carry out almost 5000 tenancy reviews over the next two years.

The Ministry said its data had identified 21 percent of state house tenants - over 13,000 people - had the potential to move into private rentals in the short-term, while a further 42 percent (over 26,000 people) had the potential to move in the medium-term.

More than half of the private renters receiving an accommodation supplement - that's 154,000 people - could be moved towards "greater independence".

So-called "levers" for reducing the state house waiting list and transitioning existing tenants included encouraging people to move away from high demand areas like Auckland and Christchurch, and offering them loans to cover bonds, advance rent and letting fees.

However, the papers warned there were risks this may create "perverse incentives" for people to go on the waiting list, and for taxpayer money to be wasted paying for people to shift who would have moved anyway.

There was a further risk that people could be tempted to move into "unaffordable and unsustainable" accommodation.

Although, as the paper noted, the loans would have to be repaid so the risk of this would be worn by the tenant and not the Government.

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