Proposal to grow social housing through a $30 million loan

To ensure that the most vulnerable are housed, Council (and now the Trust) sets rents that are affordable.  At this level of rent, the return from Council’s portfolio is not enough to cover current operational and maintenance needs, and build the additional units that Christchurch requires.  If we want to continue to provide social housing at no cost to the ratepayer, we have to work with partners to build these new homes. 

Some community housing providers, like the Trust, can access additional revenue, which is not available to Council.  This additional revenue helps generate sufficient income to service loans and meet all operational costs.  However, while community housing providers may have sufficient revenue to service a loan, they may not have sufficient equity and security to be able to satisfy usual commercial lenders such as banks. The Council is in a position to help, provided normal lending criteria are met.

The Trust is currently in advanced negotiations for a long-term housing supply contract.  The contract, together with the rents paid from tenants will effectively guarantee sufficient revenue to meet all costs, including repaying all Council’s costs (the loan, interest and any administrative costs). 

The $30 million loan would not proceed if the Trust does not secure this long-term supply contract to Council’s satisfaction.   

Council wants new social housing to be built within Christchurch, to meet both current and anticipated needs. 

While Council has not set a target, community feedback through the Long Term Plan 2018-2028 consultation process suggested that a minimum Council needs to return to pre-earthquake levels, which would mean adding at least 366 units.

We have considered building new social houses ourselves. However, at this time we cannot guarantee that we can generate sufficient revenue from rents and other sources to meet all costs and still remain rates neutral.

We have also considered letting the Crown, through Housing New Zealand, meet social housing growth needs in Christchurch.  However, community feedback through Council’s Long Term Plan and other consultation processes tells us that the Christchurch residents think it is important for us to be involved in growing social housing.

We know that demand for social housing is increasing.  As at March 2018 there were 552 people in Christchurch city waiting for social housing – an increase of 120 people since March 2017. In the next ten years it is predicted that Christchurch will need an additional 150-180 units a year – for Council, who currently provides about 30% of social housing in the city, that would mean building 50 new units a year. We therefore believe it is not appropriate to do nothing.

Finally, we have considered if there are others we could partner with to grow social housing.  We know there are others with ideas and proposals in development, but we are not aware of any that are as advanced as the Trust’s proposal.  We welcome the opportunity to talk to others about their ideas and proposals as we know that the need for additional social housing is more than the 130 units under consideration in this proposal.