23 Mar 2015

Salvation Army won't buy state houses

8:37 am on 23 March 2015

The Salvation Army's decision not to buy some of the Government's housing stock does not sink its plan to sell unwanted state houses, Finance Minister Bill English says.

The Salvation Army is ruling out the purchase of state-owned social housing stock saying buying the properties would stretch its resources too far.

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The Salvation Army says it does not have the resources to buy former state houses. Photo: RNZ

The Government plans to sell up to 8000 state houses to community groups by 2017 and up to 2000 of them this year alone.

The Salvation Army, which owns more than 400 rental houses, mainly for the elderly, was tagged as a likely buyer.

However, the group's social housing spokesman Campbell Roberts said their own research proved the transfer would be too complex, and running the properties too difficult.

He said being landlords on such a huge scale would stretch resources too far, even if the Government slashed the prices of the properties.

"We would be faced with significant maintenance issues, houses which have got the wrong tenants ... we would also need to do extensive development," he said.

"We would be putting so much resource into this that we could not actually put resource into anything else."

Mr Roberts said the Salvation Army would consider grouping together with other providers to buy social housing stock, but would not be a solo buyer.

"We can't guarantee that we would be able to improve things for the state tenants, which is exactly what we would want to do by taking [the properties] over at this stage, on our own."

'Time for a re-think'

Opposition parties said the Salvation Army's decision left the Government's social housing policy in ruins.

Labour Party leader Andrew Little said he always doubted whether community housing organisations, even large ones like the Salvation Army, would have the balance sheets and resources to pick up and administer the properties.

Andrew Little

Andrew Little Photo: RNZ / Alexander Robertson

Green Party housing spokesperson Kevin Hague said the decision left the Government's social housing policy in tatters.

"Every second sentence that a minister has uttered about his policy has included the Salvation Army. They're clearly the lead social agency that the Government hoped to have involved."

The Government is expected to begin regional consultation with community housing providers and iwi in April, with commercial negotiations starting in June.

However, Mr Little said the Government would have to go back to the drawing board.

He said he suspected the starting point would be for the Government to turn back to Housing New Zealand and tell it to do its job properly.

New Zealand First housing spokesperson Denis O'Rourke said if the Salvation Army could not buy the houses, no-one could.

"It's the major player and it is the player who the Government was looking to take up a lot of the slack."

Finance Minister Bill English releasing the Government financial statements.

Bill English Photo: RNZ / Diego Opatowski

Mr O'Rourke said the Salvation Army had been brave in its decision and had showed good sense and courage in the face of Government pressure.

"The Government needs to re-think its policy," Mr O'Rourke said.

However Finance and Housing New Zealand Minister Bill English told Morning Report the Government was still working with the community housing sector and the Salvation Army's decision did not jeopardise the sale programme.

"Not many community groups know how to run multi-hundred million dollar property portfolios so they're trying to get together," said Mr English.

"Now that's taking some time. We're taking time with these transactions. It'll take six to twelve months to complete them. We're going the next few months into much more serious focus discussions with parties who are genuinely interested."

Little surprise for housing groups

Community Housing Aotearoa director Scott Figenshow was not surprised to hear the Salvation Army opting out of the offer.

He said if the Salvation Army could not make the purchase of state-owned social housing work, few other groups would be able to either.

"If [the sums] don't stack up for the Salvation Army after they have done a very thorough analysis, I doubt they will stack up for many others," he said.

"We have had several other members of Community Housing Aotearoa comment that they simply just can't make it work for what the Government is looking for, by way of a financial return."

The former head of the Cannons Creek Ratepayers' Association, Bill Hiku, spoke out against the sales when they were first proposed last year.

He said community groups were being set up to buy the dud social housing stock, so he was not surprised to see the Salvation Army walk away from the offer.

State houses in Cannons Creek that had been earmarked for sale to the community groups were those without permanent tenants and with construction issues, including asbestos, he said.

He believed the Government would hold on to the lucrative and well maintained properties.

"The other half, [that are] not maintained and essentially do not have working families in them - those would have been sent down the road to the likes of the Salvation Army."

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