Housing New Zealand Corporation
Briefing to the Incoming Minister: Housing
under the Official Information Act 1982
Upcoming briefings and decisions
Key facts – a three year summary
Accountability documents and reporting requirements
Part One - Addressing the issues
A sector wide response
New Zealand Housing Strategy
Working with the non-government sector
The Corporation’s contribution
The Corporation’s functions
Responding to key issues and influences
Part Two – Key Corporation programmes
Social Allocation System
Official Information Act 1982
Community Group Housing
Housing Innovation Fund
Auckland housing development
Welcome Home Loan
Low Deposit Rural Lending
Rural Housing Programme
Healthy Housing Programme
Part Three - Organisational information
The Corporation’s governance and structure
General issues and financial risks
Housing financial management
This Briefing provides you with an overview of the housing portfolio and focuses on
the main environmental issues that impact on the New Zealand housing sector
Housing New Zealand Corporation’s (the Corporation) interventions and
responses to addressing housing issues
the Corporation’s role including its structure, functions and strategic direction.
The Briefing is structured into section A and section B: Section B is designed to
provide you with further detail to support section A.
background on the key issues facing the housing environment, the
Corporation’s role, and its strategic direction
a brief summary of upcoming briefings and decisions
key facts – a three year summary
accountability documents and reporting requirements.
sector–wide and Corporation responses to address the issues
the role of the Corporation including its structure, financial management and
the Official Information Act
The Corporation’s work programme for 2007/2008.
This section provides a summary of the key issues influencing the New Zealand
housing environment and explains the role of the Corporation and its strategies to
address these issues. Additionally, this section outlines a number of upcoming
briefings and decisions that will be required in the near future and explains how the
Corporation will agree its performance objectives with you and report against them.
Upcoming briefings and decisions
Key facts – a three year summary
Accountability documents and reporting requirements
The New Zealand housing environment
The New Zealand housing sector is influenced by a broad range of factors, such
as changing socio-economic, technological and environmental factors that
influence the demand for, and supply of, housing. External factors such as global
and technological change also affect demand and supply. Other factors include
regional demographic changes, lifestyles and personal aspirations, the needs of
specific groups, new construction technology, and higher building standards.
The majority of New Zealanders do not require government assistance to find
suitable housing solutions for themselves. Most people are able to meet their own
housing needs by owning a house or renting in the private market. However, all
New Zealanders are affected by economic conditions such as interest rates,
inflation, tax rates, and are governed and influenced by Government policies and
legislation such as the Residential Tenancies Act.
The Corporation is the chief provider of social housing in New Zealand, however
there are a wide variety of other organisations including local government,
community based groups and iwi also providing social housing for people on low-
to- modest incomes. However, as highlighted by Figure 1 below, the social
housing sector is small when compared to the wider housing sector.
Figure 1 The New Zealand Housing Sector the
The New Zealand Housing Sector
Private Rental Market
Statistics New Zealand Census 2006 Household and Dwelling Survey Results
The emerging problems for New Zealand housing can be broadly summarised as:
declining housing affordability, limited housing supply, variable housing quality and
ongoing demand for social housing. Some people are struggling to service
housing costs in all forms of housing.
Changing and diverse housing demand
The New Zealand population has grown by 7.8 percent between 2001 to 2006 and
is projected to reach over five million by 2041. The population growth rate is
projected to slow over time with immigration becoming a major factor in any
population increase. The Auckland region accounts for the highest rate of
increase, and currently houses 32.4 percent of New Zealand’s population.
Population drift towards Auckland is expected to continue.
The population of New Zealand is ageing. The growing size of the elderly
population means more housing will need to be suitable for elderly residents.
Disability rates increase with age, therefore the number of people with disabilities
is expected to increase substantially over the next 10-20 years. There are
implications for the types of housing needed and the associated modifications
needed to improve housing accessibility.
The ethnic make-up of New Zealand is becoming increasingly diverse, particularly
in the Auckland region. The structure of families varies between different cultures
and ethnicities and therefore the type of housing required also varies. A large
proportion of Māori and Pacific people are currently either state housing tenants or
applicants, a trend which is expected to continue.
Changing family and household structures
The structure of families and households continues to change. The proportion of
one-parent families and couples without children is increasing.
The change in household structures has particular implications for state housing.
In future there will be comparatively less demand for the standard three bedroom
home and an increased demand for smaller homes to house growing numbers of
childless and elderly households.
Increases in housing prices have outpaced rises in average household income,
making housing unaffordable for many, particularly people seeking to buy a first
home. House price inflation over the last five years has priced many potential first
time home buyers out of the housing market, particularly in Auckland. Home
ownership rates continue to decrease.
Fewer people are able to buy a home of their own, so there has been an increase
in the number of people renting accommodation. It is likely that more New
Zealanders may remain in private rental accommodation throughout their lifetimes.
This has implications for social and health outcomes, such as security in old age,
the ability for the elderly to stay in their homes and retirement income. There are
also flow on implications for Government, such as aggregate household savings,
growth in Accommodation Supplement outlays and investment in social housing.
Increasing housing costs affect many families across a wide range of social and
economic areas, and curtail choices about where people live, which can, in turn,
affect labour markets and employment opportunities. Even if house prices do
stabilise over the next few years, a large number of households are likely to need
continuing Government assistance if they are to access and sustain home
ownership, or attain greater security of tenure in the private rental market.
The Crown provides assistance for low- to-modest income earners to meet
housing costs in the private sector through the Accommodation Supplement1,
administered by the Department of Work and Income. Housing cost assistance for
state housing tenants is provided through Income Related Rents in which low
income Corporation tenants pay no more than 25 percent of their income in rent.
There is a range of current and planned initiatives to assist aspiring homeowners
in buying their first home. This includes deposit assistance for KiwiSavers
(available from 2010), a shared equity pilot and education programmes to provide
people with the skills and knowledge they require to buy and own their first home.
Additionally, the Corporation provides Welcome Home Loans, a product providing
insurance to lenders to offer low or no deposit home loans to first home buyers.
Welcome Home Loans have been effective in assisting people who would not
otherwise have been able to achieve home ownership. However, these initiatives
are small in scale.
Another way to influence the price and cost of housing is through the supply of
new affordable housing. The Corporation’s integrated urban development projects
in Hobsonville, Weymouth and Papakura will provide affordable homes for first
home buyers and will create a mix of tenure types including state and private
housing. Additionally, the Corporation’s proposed redevelopment of state housing
in the Tamaki area will increase affordable housing opportunities in the area. The
proposal will be submitted in a paper to Cabinet for consideration in February.
Another key work-stream is the proposed Affordable Housing Bill being considered
1 The Accommodation Supplement is available for current housing costs.
by Cabinet, which will enable territorial authorities to use regulatory tools and
incentives to help increase the supply of affordable housing.
The Corporation is also involved in an inter-agency project under the management
of the Department of the Prime Minister and Cabinet which will shortly report to
Cabinet on what can be done to moderate house price increases and stabilise the
volatility of the market.
The growing, ageing and increasingly diverse New Zealand population will require
more housing in the right places to meet future need. In Auckland alone, projected
population increases indicate a need for 80 percent more housing in the region
within the next 25 years.
The Corporation currently houses 198,250 people and has built, bought or leased
7,400 additional homes since 1999. The Corporation will continue to increase its
housing stock to meet housing need, as well as considering how it can use its
existing stock more effectively. It needs to be innovative in the way it configures
existing stock and land for future demand. The traditional three bedroom state
house is no longer appropriate for the needs of many of the applicants on the
waiting list and the Corporation is reconfiguring its portfolio so that it is able to
address demand for smaller and larger families requiring state housing.
In addition, the Corporation works with tenants who no longer need large homes
by supporting them to move to smaller houses that are more suitable to their
needs. In 2006/2007, the Corporation helped 331 tenants shift from large
properties to more suitable accommodation which resulted in a net gain of 394
bedrooms – equivalent to 131 three-bedroom houses. Assuming a national
average three-bedroom house price of $300,000, this equates to a saving of $39.3
million in capital expenditure over the last financial year.
Increased housing demand and reduced land availability, particularly in Auckland,
have resulted in the Corporation taking a more active property development role to
secure land and/or redevelop appropriate housing at a reasonable cost to meet
demand. Urban development with an increased density of housing is one
mechanism for responding to changes in the types of housing required. The
integrated urban developments in Hobsonville, Weymouth and Papakura will
provide up to 3,650 additional homes in a mix of private and social housing.
Not all social housing is provided by the Crown. The Corporation works
strategically in partnership with a broad range of social housing providers
(including local authorities) to ensure existing social housing is retained to
strengthen the ability of the community. There is high demand for the Housing
Innovation Fund, which gives the Corporation the ability to support third sector
agencies in providing innovative social housing solutions.
The Corporation is undertaking a review to assess the role of Government in
supporting non-government social housing and develop a strategy for
strengthening the ability of the non-government sector to address unmet need.
Investing in good quality housing provides communities with a broad range of
benefits, in contrast to the proven long-term social, health and economic costs of
poor quality housing. Substandard housing is a significant issue in New Zealand.
It is particularly prevalent in rural areas where inadequate infrastructure often
exacerbates the problem. The Corporation’s Rural Housing Programme provides
essential repairs and new infrastructure to address health and safety issues and
has been focused on the Northland, East Coast, and Eastern Bay of Plenty rural
areas where such issues are common.
Since 2001, the Corporation has completed approximately 1,800 housing 1982
interventions in these areas, but it is estimated that this work accounts for only
about 20 percent of the substandard housing within these three rural regions.
However, the problem of substandard housing will not be eliminated through this
programme alone. Cabinet has recently agreed to a new approach to delivery of
this programme, but its continuation beyond July 2008 is dependent on funding
through Budget 2008.
The Corporation also works with the Department of Building and Housing (DBH) to
provide bridging finance to assist owners of leaky homes to complete repairs as
part of a two year Non-Weathertight Homes pilot. The pilot is funded until July
2008 and the future of assistance to owners of leaky homes will be based on the
findings from the pilot evaluation due to be reported to you by late 2008.
People increasingly expect their houses to be safer and healthier places to live.
Improving the energy efficiency of housing is an immediate priority to reduce
pressure on natural resources and the environment. The Corporation has a range
of initiatives including energy efficiency and Healthy Housing programmes, aimed
at making state houses safer, warmer and more energy efficient.
Auckland is New Zealand’s largest city with a population growing at 3.1 percent
per year, expected to increase to two million people by 2031. The region has the
highest demand for state housing, with 60 percent of people on the Corporation’s
priority (A and B) waiting lists wanting to live in Auckland. Rising house prices and
continued decline of affordable private rental housing are increasing the demand
for housing assistance.
Auckland also houses high numbers of refugees and new migrants. Currently 70
percent of refugees and migrants to New Zealand settle in the Auckland region. It
is predicted that an extra 320,000 homes will be needed in Auckland by 2031 to
meet housing demand.
The Auckland region is home to a widely diverse range of communities and
includes areas of deprivation where large numbers of low income people are
concentrated. Additionally, high rents, low incomes and a lack of housing stock
often contribute to people living in overcrowded conditions.
Some 44 percent of the Corporation’s owned and leased properties are in
Auckland and the majority of its asset acquisition, reconfiguration programmes and
property development activities are centred in the region.
In acquiring and developing social housing in the area, one of the challenges the
Corporation faces is the high level of property prices in many parts of Auckland. It
must also overcome opposition towards social housing by some residents living in
the region, particularly in areas of high and medium wealth. The Corporation is
undertaking development projects in Hobsonville, Weymouth, Papakura and
Tamaki to increase social housing numbers and provide new affordable housing
To ensure resources are used efficiently and that collaboration with other agencies
and key stakeholders is effective, the Corporation is developing a co-ordinated
long-term strategy to address housing pressure in the Auckland region.
A sector wide response
The New Zealand Housing Strategy
The New Zealand Housing Strategy (the Strategy) sets priorities for housing and a
programme of action to lead the sector over a 10 year period. It takes a sector
wide approach, involving local government, communities and business, together
with the Department of Building and Housing and other agencies. In achieving its
outcomes, the Strategy seeks to achieve an integrated view of housing rather than
one that is isolated from other policy areas.
The Strategy is based on the premise that no single agency can achieve success
on its own, and that each agency needs to understand its role in working to
achieve the agreed outcomes. The Corporation shares responsibility with a broad
range of agencies to implement the programme of action. A steering group has
been established to oversee the Strategy’s implementation. Many other
Government agencies including the Ministry for Social Development, Ministry for
the Environment and the Department of Building and Housing are leading
The Corporation’s activities under the Strategy contribute to the three themes
identified by Government aimed at transforming New Zealand: Economic
Transformation, Families Young and Old and National Identity. The Corporation
contributes by providing affordable, safe housing and good quality community-
based services. Housing quality initiatives, including the Corporation’s Healthy
Housing programme, also help to improve family wellbeing.
The Corporation’s role
The Corporation is committed to providing targeted services to meet the diverse
housing needs of New Zealanders and has a significant role to play in helping the
Crown address many of the issues facing the housing sector. The Corporation is a
Crown entity that has two distinct roles: to deliver housing assistance, and to be
the principal advisor to Government on housing and housing policy. The
Corporation’s role is to understand housing need, facilitate housing solutions,
support sustainability, encourage alternative social housing, and provide advice on
The Corporation’s traditional role has been to provide social housing to those with
the greatest housing need. As a social landlord, the Corporation responds to
people in a way that is fair, timely and consistent with the Government’s housing
objectives. However, this is only one way in which the Corporation responds to
In undertaking all of its activities, the Corporation looks beyond individual
customers to consider also the needs of communities in which they live. The
Corporation’s functions include:
• providing rental housing for those who need it most
• providing suitable accommodation for community organisations that offer
residential support services for people with special needs
• providing help and advice on matters relating to housing services for people
on low- to modest- incomes who wish to purchase their own homes
offering a range of home ownership products and services
• acquiring and developing land for housing or other development
selling, leasing, disposing of, managing, or otherwise dealing with land
• acting an as agent to departments of state or Crown entities in the provision of
housing or services related to housing
• providing housing services as outlined in the Corporation’s Statement of Intent
• conducting research into, and monitoring trends in housing and services
related to housing
• advising the Minister of Housing and the Minister of Finance on housing and
services related to housing
• helping to increase housing supply
• working in communities, with local government, Māori and iwi to address local
• linking with other organisations and providers to help people with housing
The Corporation’s strategic direction
The Corporation’s strategic direction describes the ‘what, how and why’ of its work.
It sets out the medium to long term direction and identifies how best it can align
and contribute to the achievement of the goals of the New Zealand Housing
Strategy and the Government’s theme of Families Young and Old.
2007/2008 Statement of Intent
The Corporation’s strategic direction is set out in its 2007/2008 Statement of Intent
and outlines the vision, mission, outcomes and key business priorities for the year.
The Corporation’s Vision has been adopted from the New Zealand Housing
Strategy and provides a long term direction to ensure that “all New Zealanders
have access to affordable, sustainable, good quality housing appropriate to their
The Mission is to “provide access to decent homes, helping New Zealanders
manage their own circumstances and contribute to community life”.
The Corporation’s Outcomes describe what it seeks to achieve through its work
and how it will impact on the lives of New Zealanders. The two outcomes are:
• A supply of good quality, affordable housing
– This outcome focuses on
interventions that improve or increase the overall supply and distribution of
affordable housing across the sector
• Sustainable housing solutions
– This outcome focuses on interventions that
strengthen the ability of individuals, households and communities to achieve
their own housing solutions.
Key Business Priorities (BUILDS)
The Corporation’s six Key Business Priorities for 2007/2008 provide focus to guide
the planning and priority setting of its work programme. The Key Business
Business Priority One - Build diverse, strong and sustainable communities
This Priority focuses on the Corporation’s responsibility for managing the social
housing portfolio in a manner that meets tenant need.
Business Priority Two - Understand that housing is more than a roof over people’s heads
This Priority focuses on providing holistic tenancy management and support
services for applicants and tenants that are linked with services provided by other
social service providers.
Business Priority Three - Innovate in the development and delivery of services
This Priority focuses on being innovative in developing new solutions for
addressing housing need. This includes playing a role in creating sustainable
communities of mixed incomes and tenures, and providing increased opportunities
for affordable home ownership.
Business Priority Four - Lever partnerships with community and private organisations
This Priority focuses on strengthening the capability of social housing providers
and supporting local government, community-based organisations and iwi to
provide social housing and other community initiatives.
Business Priority Five - Develop organisational capacity to improve productivity
This Priority focuses on developing staff and management, systems, services that
support the Corporation’s mission.
Business Priority Six - Share responsibility for the Government’s New Zealand Housing Strategy
This Priority focuses on the Corporation’s role as a key advisor to the Government
on housing and housing-related services.
2008/2009 and beyond - responding to a changing environment
At its September 2007 Strategic Retreat, the Board examined the future
challenges for the Corporation and identified key areas of focus for 2008/2009
The key focus areas include:
• Understanding the changing nature of demand – the Corporation needs to be
understand the key determinants of demand, their interrelationship and the
profile of its client base both now and into the future. Building this knowledge
will enable it to secure tenure for its clients but be able to change the asset
base over time
• Changing the way it delivers services – the Corporation needs to identify
critical stages within housing pathways to identify where it can influence them
positively. A holistic approach to the issues requires working with other social
agencies and service providers to support tenants to move towards better
• Developing innovative solutions and partnerships – the Corporation needs to
develop new interventions outside of traditional tenancy management/asset-
based responses. This requires developing strong working relationships with
a range of partners across the housing sector
• Developing sustainable communities – the Corporation needs to move from a
social landlord/property management role to being a community enabler. This
requires positioning itself as a catalyst for community development processes.
The Corporation will seek to refine its strategic direction to address these key
focus areas in 2008/2009. This will include developing a new vision, priorities and
work programme to ensure that it is effectively positioned to respond to the 1982
changing environment. The key areas of focus for 2008/2009 will be further
discussed in the Corporation’s Letter of Business Intent which will be provided to
you in December 2007.
Upcoming briefings and decisions
There is a significant amount of work in progress in addressing the key issues
facing the housing sector. You will be briefed on some of this work in the coming
months. The content of these briefings and the decisions required are outlined
below. Some of these initiatives address issues under more than one heading.
Meeting changing and diverse housing demand
The Housing Pathways framework brings a new approach to engaging with state
housing tenants. The framework focuses on the housing progression of different
households and the interventions required to achieve positive outcomes.
Instead of only dealing with immediate needs, the framework takes a longer term
view of why people need state housing, what outcomes they could achieve in
future, and how the Corporation and other agencies can support them to achieve
The Corporation’s current tenancy management approach is already consistent
with this philosophy. To further progress the framework, the Corporation is
• identifying the best features of existing projects and initiatives that already
adopt a pathways philosophy and roll these out more widely
• developing formal tools and supporting policy to give effect to a pathways
• identifying and assessing the resource implications of shifting to a more active,
outcomes based approach.
You will receive a briefing on the housing pathways framework during November
The Corporation will seek to engage with the Minister to reach an agreement
regarding the prioritisation of initiatives to be considered in Budget 2008.
The package of initiatives for Budget 2008 that has been identified by the
Corporation and the Government is likely to far exceed the available Government
funding that would be approved. It is proposed that the Chairman of the Board
meet with the Minister to discuss their respective priorities and formally agree a
package for Budget 2008
Review of the non-government social housing sector
The Corporation is conducting a policy review of the role of non-government social
housing sector and will develop strategies for future development of the role. You
will receive advice on a proposed strategic direction for the sector and options for
its growth and funding in the new year.
Wellington City Council Social Housing Initiative
The Crown and Wellington City Council have developed a partnership agreement
for the Crown to provide financial assistance of $220 million over 10 to 15 years to
upgrade the Council's housing stock and enable the Council to remain in social
housing. A joint briefing on progress was provided to the Ministers of Housing and
Finance in October 2007. Direction was sought on the servicing and retirement of
debt allocated to the Council social housing portfolio. Depending on the outcome,
a Cabinet paper may be required for the Cabinet Policy Committee. You will be
asked to agree to a Deed of Grant between the Crown and the Council and to the
Council’s work programme by April 2008.
Accommodation Supplement review
The joint Corporation and Ministry of Social Development Accommodation
Supplement review has been completed. Proposals to adjust the Accommodation
Supplement have been developed including:
adjustments to Accommodation Supplement areas and maxima to improve
housing affordability for those facing the most difficulties finding affordable
• a targeted communications strategy to increase awareness of the
Accommodation Supplement amongst groups of working people who are
eligible, but are not using the Supplement.
You will receive a briefing on this in November 2007. The proposals will be
considered by Ministers alongside other priorities in Budget 2008.
KiwiSaver deposit subsidy for first home buyers
The Corporation is responsible for developing and administering the deposit
subsidy component of KiwiSaver. The subsidy will be available to KiwiSaver
members who are buying a first home from 1 July 2010. The Corporation will
provide you with a briefing on the planned development approach in February
In April 2006, Cabinet directed the Corporation to review its lending products to
reduce product clutter and low uptake. In August 2007, a report went to the Board
of the Corporation, recommending a more strategic approach to lending and
several operational improvements. Following further consideration by the Board, it
is expected that recommendations will be put to you for consideration in the new
Optimal Financial Governance Review
The Corporation, the Department of Building and Housing and the Treasury have
reviewed the financial governance structure of the Corporation. The objectives
were to enhance clarity of financial decision-making authority, increase the visibility
of the Corporation’s costs and enhance the ability to assess the Corporation’s
efficiency. The review recommended that lending products should be fully costed
and only funded through Government appropriations. This would increase
transparency, but could reduce the Corporation’s flexibility to respond to housing
needs outside of Government’s Cabinet and budget process. You will be
updated on the outcomes of the review when it has been finalised.
Affordable Housing Bill
A draft Affordable Housing Bill was considered by Cabinet Policy Committee on 29
October 2007. The Bill would enable local government to play a more proactive
role in facilitating an increase in the supply of affordable housing. The
Government has signalled that it intends to introduce a Bill to Parliament in the
Tamaki transformation programme
The Tamaki transformation programme will redevelop the Tamaki area to provide a
wider mix of social, affordable and market-rate housing, improve community
services and reduce the concentration of state housing. You will receive a briefing
in November 2007 outlining an initial multi-agency plan of action for Tamaki.
Following on from this, there will be a paper prepared for Cabinet in February 2008
with a proposed business plan and governance arrangements for the Tamaki
The Hobsonville development is a staged project to develop an integrated urban
community on the site of the former Hobsonville air base, subject to appropriate
resource consents. It is being undertaken by the Hobsonville Land Company, a
wholly-owned subsidiary of the Corporation. A Business Case for the development
was approved by Government in December 2006. Following a tender process, a
development company has been nominated to advance to “preferred partner”
stage. Following settlement of a Heads of Agreement, Hobsonville Land Company
expects to provide a briefing for Joint Ministers (Finance and Housing) on the
development proposal in November 2007.
Key facts on the Corporation’s activities
Table 1 below displays various ‘at a glance’ statistics relating to some of the
Corporation’s services and activities over the last three years.
Key facts – a three year summary from 2004 to 2007
Services to the Minister
Call centre enquiries
Website user sessions
Number of let tenancies
Number of total occupants
Waiting list total
New tenancies created
Total Housing Innovation
funding (excluding interest foregone)
Full time equivalent employees
Staff induction training
IT systems availability
Value of all owned properties
Accountability Documents and Reporting
Table 2, below, outlines the Corporation’s key accountability documents that drive
direction and performance as well as outlining the reports that the Minister will
receive on an ongoing basis.
Regular documents and reports to the Minister
Brief description of content
Timing for 2008/09
The SOI sets the Corporation’s strategic direction Annually
for the next three years and identifies how
outcomes will be achieved and measured. It also May 2008.
outlines the Corporation’s contribution to the
Government’s social goals and the Minister’s Tabled in Parliament in
Letter of Expectations (LOE).
accordance with legislative
Treasury released the first set of guideline
material relating to a Review of Accountability
documents (RoAD) that will impact on the
development of the SOI and Output Agreement
for 2008/2009. In summary, the guidelines state
• The changes to the Estimates of
Appropriation will require revised
definitions and performance
information for each output class
• SOIs are expected to be shorter and
have a plainer presentation style
• Crown entities will be asked to prepare
SOIs for release on Budget Day
• The Estimates of Appropriation will
focus on one-year timeframe and SOIs
will be expected to focus on three to
five year timeframes.
You will be providing formal notice of these
changes to the Board Chair through the Letter of
Expectations for 2008/2009.
The Output Agreement provides you with a more
detailed explanation of expected performance
(Led by the
than the SOI and the Estimates. It focuses on
the funding and production of outputs including
the particular standards, terms and conditions
under which the Corporation will deliver and be
paid for the specified outputs.
The Corporate Business Plan sets out how the Annually
Corporation’s programmes and services will be
delivered against the outcomes and business May/June 2008.
priorities detailed in the SOI. This is the internal
accountability document for all staff, and has an
operational yearly focus.
The Annual Report is the primary vehicle for
providing you with a report on the previous years’
SOI. It gives a clear account of how the
Tabled in Parliament in
Corporation has delivered on performance
expectations including financial statements.
Quarterly reporting is the primary mechanism for Quarterly.
providing you with a snapshot of performance to
date against the work program in the current SOI.
The Minister of Housing’s agent, the Department of Building and Housing, is
responsible for administering Vote Housing and monitoring the Corporation.
The Corporation and the Department of Building and Housing consult on key
issues, the development of the Corporation’s accountability documents and
progress against performance measures as required throughout the year.
Section B – Part One
Part One of this section provides more detailed commentary on current and
planned responses to the key issues influencing the housing sector. The
commentary is broken into two areas of response. The first area outlines whole of
government sector-wide strategies and initiatives, whilst the second area focuses
on the Corporation’s contribution role within this context, and as the Government’s
chief provider of social housing.
Addressing the issues
A sector wide response
• New Zealand Housing Strategy
• Working with the non-government sector
The Corporation’s contribution
• The Corporation’s functions
• Responding to key issues and influences
Part One - Addressing the issues
A sector wide response
New Zealand Housing Strategy – Programme of action
‘Building the Future: The New Zealand Housing Strategy’ was launched in May
2005 and sets out the possible priorities and actions for the housing sector over
the next 10 years. The Strategy’s vision is that ‘All New Zealanders have access
to affordable, sustainable, good quality housing appropriate to their needs’. It was
developed following extensive consultation with a broad range of stakeholders,
including the building industry, local authorities, community and business groups.
This section summarises the Strategy’s priorities and seven areas for action.
Further detail is in the Strategy’s June 2005 implementation plan.2
The Corporation works with other agencies on Government priorities under the
Families Young and Old theme. The priorities for housing under Families Young
and Old for 2007/2008 are:
• develop a multi-agency Business Plan for the Tamaki Transformation
• develop an integrated urban community at Hobsonville
• develop legislative mechanisms (including an Affordable Housing Bill) to
enable local authorities to use regulatory tools and incentives to increase the
supply of affordable housing
• complete a review of the role of the non-government social housing sector
• launch a two-year shared equity pilot in July 2008
• focus on work to improve the quality of existing houses (for example, by
developing proposals to speed up the delivery of the Rural Housing
Programme) and work to ensure that new houses are built to a good standard
(for example, by implementing the Licensed Building Practitioner scheme from
• partner with iwi, Māori and key stakeholders to enable the development of
affordable Māori housing and sustainable communities, consistent with the
Corporation’s Māori Strategic Plan 2007 to 2012.
2 Strategy implementation is being led by Housing New Zealand Corporation, unless otherwise stated.
The Strategy’s Programme of action
Area 1: Sustainable housing supply
The Corporation and the Department of Housing are working on understanding the
complex issues affecting housing supply, and finding solutions to problems
identified in the Strategy. This work is informed by international research, but also
reflects the special features of the New Zealand housing market.
Area 2: Assistance and affordability
The New Zealand housing market caters for the housing needs of about 90
percent of New Zealanders, without Government assistance. However, more and
more households in the middle, as well as lower-income ranges, are finding it
difficult to afford housing. The Strategy promotes increasing the number of state
houses and continuing to modernise state housing, conducting a review of the
Accommodation Supplement, investigating demand for emergency housing and
developing clearer funding policies and initiatives to support emergency housing.
Area 3: Home ownership
While New Zealand’s home ownership rate remains high by international
standards, the recent decline and implications of that decline for the future are of
concern. The Strategy focuses on encouraging home ownership in the short to
medium-term by expanding Government assistance for aspiring home owners,
mainly through the expanded Mortgage Insurance Scheme (Welcome Home
Loan), home ownership education, and further help for first home buyers.
Area 4: Private rental sector
This area of the Strategy looks at the provision of landlord and tenant education, at
bond and mediation services, and at the legislative framework for residential
tenancies. Government has an interest in ensuring that good quality rental
housing catering to diverse housing needs is available. In the short-term, the
focus is on the review of the Residential Tenancies Act 1986. This work is being
led by the Department of Building and Housing.
Area 5: Housing quality
The Strategy promotes good quality housing through establishing housing
standards, regulating housing quality, and modelling best practice in its own
projects. Investing in good quality housing results in long-term social, health and
economic benefits. A balance is needed between quality standards and the cost of
new regulations, including enforcement. Raising the quality of New Zealand’s new
and existing housing stock will be effected through updating regulations and
housing standards, implementing programmes focused on energy efficiency and
housing-related health, and by encouraging innovation in design and development.
The Department of Building and Housing is leading work in this area.
Area 6: Sector capability
Strengthening the housing sector’s abilities and skills requires a strong regulatory
framework and trade training, as well as research into housing supply, home
ownership, workforce accommodation and scenario planning. This will help
position the sector to better respond to present and future needs.
Area 7: Meeting diverse needs
Everyone’s housing needs, including tenure, dwelling type and accessibility, are
different, and will change over time. Developing work programmes to address the
housing needs of elderly people, women, children and youth, people with
disabilities, Māori, Pacific peoples and other ethnic communities are the priorities
of this area of work.
Working with the non-government sector
The Corporation ensures that the provision of social housing is shared between
the state and other providers. The Corporation does this by:
• entering into strategic partnerships with local authorities and other providers to
secure and improve the quality of social housing stock
• building capacity and capability with housing providers so they have the skills
to continue to manage (and grow) their social housing portfolio
• providing funding through the Housing Innovation Fund to secure existing
housing stock and increase the provision of social housing
providing funding for innovative housing projects to address affordability and
housing supply (e.g. Queenstown Lakes shared equity).
The development of the non-government social housing sector is essential in
providing a diverse range of housing to meet complex social housing needs. It
combines the development of local capacity with community engagement and
ownership to increase the amount of social housing available. It also spreads risk.
It is important that not all social housing is provided by the Crown. It is not a ‘one
size fits all’ approach.
The Corporation’s Housing Innovation Fund supports innovation by community
groups and local government in providing social housing. It also allows complex
needs to be addressed.
There is high demand for the Housing Innovation Fund. The last few years of
investment in capacity building are paying off as more community groups and local
government use the Fund to upgrade and provide new social housing. In addition,
a number of Councils have witnessed the agreement between the Crown and
Wellington City Council, and are interested in pursuing similar projects.
There are likely to be fiscal pressures on the Housing Innovation Fund, which will
need to be considered as part of decisions about the continuation of funding and
the appropriate level.
Review of the non-government social housing sector
The Corporation is assessing the role of Government in supporting non-
government social housing. The review aims to develop a strategy for
strengthening the ability of the non-government sector in reducing unmet housing
needs. It recognises this sector has a role that complements state housing
provision, by providing valuable and specialist social housing and additional
However, the non-government social housing sector is small and under-resourced,
and requires additional support to ensure it continues to grow and expand. The
development of a strategy and sustainable funding model for the sector will
address these issues and strengthen the sector.
The Corporation’s contribution
The Corporation’s functions
In 2001, the Corporation was created by amendments to the Housing Corporation
Act 1974. The Act sets out the Corporation’s social and commercial objectives.
The Corporation’s functions include:
• policy advisor
• social landlord
• asset manager
• urban developer
• lender and insurer
• capacity builder
The Corporation’s policy unit provides strategic, operational and sectoral advice to
the Minister of Housing, locating the primary advisor on housing sector policy
within the agency that implements the Government's housing policy. It
complements the Department of Building and Housing’s policy advice, which
focuses on the regulatory framework for the housing and building sector (including
The annual output plan in the Statement of Intent, agreed between the Minister
and the Corporation, provides the basis for the policy work programme. The work
programme contributes to the New Zealand Housing Strategy, and includes work
• home ownership and lending policy options (for example, a shared equity
• the supply of affordable housing
• reviews of social housing assistance
• Māori housing
• community renewal and mixed communities
• Auckland housing initiatives
The Corporation provides state housing to people with the highest housing need,
and administers Income-Related Rents. The Corporation currently provides over
68,000 houses, including just over 1,500 houses to community groups. Over the
2005/2006 year, the Corporation housed 10,326 families.
100 The Corporation is subject to the Residential Tenancies Act 1986, which applies to
all landlords. The Act is administered by the Department of Building and Housing.
Corporation tenants can seek mediation from Tenancy Services or have cases
heard at the Tenancy Tribunal. Additionally, the State Housing Appeals Authority
hears appeals regarding Corporation decisions about Income-Related Rents or a
person’s eligibility and priority assessment for state housing.
Income-Related Rents (IRR)
101 Under IRR, low-income Corporation tenants pay no more than 25 percent of their
income in rent. Low-income has been defined as the relevant rate of National
Superannuation. Tenants with incomes above the National Superannuation low-
income threshold will pay progressively more than 25 percent of their income, until
the market rent is reached. About 90 percent of state house tenants pay an
Allocating social housing
102 The Corporation allocates state housing to people in greatest need. It does this
through a Social Allocation System (SAS). Housing need is determined by
considering the affordability, adequacy, suitability, accessibility, and sustainability
of an applicant’s accommodation.
3 Note that this figure does not apply to Community Group Housing tenancies.
103 Applicants are given a priority assessment: A (at risk), B (serious need), C
(moderate need) and D (low-level need). People who cannot be housed
immediately are placed on a waiting list. More detailed information about the
system is available in the case studies below.
Case studies of Social Allocation System priority need categories
1. Single expectant mother with one child
The applicant had no fixed abode and had been transient for five years,
including living on the streets. She had never been able to access and/or sustain decent
housing due to a debt history. Her son was placed with his maternal grandparents until
the applicant could address various social and health issues and housing issues.
Housing need assessment:
Priority A (based on adequacy, suitability, accessibility and
Applicant was housed by the Corporation close to her parents and son.
Continual support was provided by the Auckland City Mission.
2. Single parent with seven children
The applicant was unable to access private sector housing due to family
size, and had been renting a family member’s property for five years. This property was
now being sold under mortgagee sale. The applicant did not lack the ability to access
private housing, but could not secure a tenancy.
Housing need assessment:
Priority B (based on affordability, suitability, accessibility and
The applicant was housed in a five-bedroom state house.
3. Single parent with two children
The applicant was living in a Women’s Refuge due to domestic violence.
She could not access private sector housing because of a debt history and previous
alcohol and substance abuse.
Housing need assessment:
Priority B (based on suitability, accessibility and
The applicant is currently undergoing counselling for substance abuse and is
addressing her debt history. She has accepted a state house close to family and support.
4. Elderly couple
The applicants had a history of evictions from the private sector. Their
third eviction was due within three days. The couple faced large debts and were unable to
sustain private sector options. The applicants had pawned off jewellery and furniture to try
and sustain their current living arrangements. The Auckland City Mission had tried
unsuccessfully to access other housing options.
Housing need assessment:
Priority A (based on affordability, accessibility and
The couple were housed in a Corporation property, with the Auckland City Mission
providing continued support, particularly financial management.
Waiting list management
104 The waiting list has three main applicant groups: new applicants, existing state
house tenants who require alternative accommodation (or transfer), and existing
state house tenants who the Corporation wishes to transfer to make better use of
105 The national total waiting list (all priorities) at 30 June 2006 was 9,955, down from
11,713 a year ago. The split of applicant numbers is broken down by priority on
the table below. Approximately half of the people on the waiting list are in
Total waiting list showing number of applicants by priority ranking
Number of applicants
106 Because the Corporation allocates housing based on need, many applicants
assessed as having low priority are often unlikely to be housed in a state house.
The Corporation is undertaking work this year to consider ways that low priority
applicants can be best managed.
Household Action Plans
107 Household Action Plans are tailored plans for high need tenant households who
may have issues such as rent arrears, difficulties with neighbours (complaints), or
frequent property damage. The plans provide a proactive and supportive tenancy
management approach to help these tenants achieve sustainable housing.
108 Staff work with these tenants to prepare the plans that are tailored to help solve
the problems they face, such as budgeting, housekeeping and obtaining medical
assistance. Staff do this as part of normal tenancy management practice.
However, if a tenant household’s need becomes more complex, the household is
referred for more intensive case management (see below).
109 During 2004/2005 the national framework for Household Action Plans was
implemented. As at 30 June 2006, 445 tenant households had Household Action
110 Increasingly, tenants and applicants have complex needs. The Corporation
assesses their housing needs and co-ordinates access to other support
organisations. At 30 June 2006, a total of 765 households were identified as
having complex needs, of which 99 percent had case management plans. The
Corporation’s Housing Pathways framework also gives the Corporation a better
understanding of the drivers that shape people’s housing needs and the kind of
interventions and support required to help them achieve better housing outcomes.
111 The Corporation manages over 68,000 rental units throughout the country. The
stock has increased by 7,400 units since 1999.
112 The Corporation produces a medium-term Asset Management Strategy (2007-
2010), which informs its asset management activity and provides it with a clear
direction on using its state housing assets to meet the Government’s expectations.
113 The Corporation's key asset management objectives are to:
• demonstrate sustainable urban development that fosters strong communities
• provide decent homes that meet tenant and community needs
• make efficient use of the Crown’s resources in efficiently achieving social
114 The Corporation’s response to long-term demand in this area is to add housing,
reconfigure and modernise older housing, and dispose of housing that is not
appropriate for future needs. The Corporation acquires new housing through
purchase, leasing arrangements, and building.
115 Key asset management priorities in 2007/2008 include:
• creating opportunities in existing areas to develop sustainable, vibrant
• taking whole-of-community approach recognising social, cultural, economic
and infrastructure factors
• working with communities, iwi, Māori and private organisations to create
sustainable, successful communities
• contributing to improving housing in rural communities with substandard
• ensuring urban design is environmentally sustainable
• providing housing solutions that improve the health of occupants
demonstrating quality housing practice in redevelopments, new developments
• managing Crown funding to support upgrading of Wellington City Council’s
social housing portfolio
• protecting and enhancing the economic value of the portfolio while addressing
the social objectives
• protecting the physical condition and maximising the economic life of the
Urban and community developer
116 The size of housing demand and the scarcity of suitable opportunities for buying
existing housing have resulted in the Corporation taking a more active property
development role, particularly in Auckland.
117 The Corporation has been working with other parties to promote the development
integrated urban communities by using land formerly owned by the Ministry of
Defence in Papakura and Hobsonville, and the Department of Children, Youth and
Family in Weymouth. Additionally, the Corporation aims to redevelop the Tamaki
area to de-concentrate state housing and create a community of mixed tenures
with affordable housing opportunities. Further information on these developments
can be found in the work programme section.
Lender and insurer
118 The Corporation offers the following targeted home ownership programmes for
people who cannot purchase a house using commercial finance:
• Mortgage Insurance Scheme (Welcome Home Loan) to help modest-income
households into home ownership by insuring 95–100 percent loans. As at
September 2007, the Corporation has assisted 3,030 people into home
ownership through the provision of Welcome Home Loans. The Corporation
continually reviews the effectiveness of the criteria in relation to market
• Low Deposit Rural Lending to assist low to modest-income families in
specified rural areas into home ownership.
119 A national Home Ownership Education programme is also available, and the
Corporation has recently completed a tendering process to contract service
providers to manage the education programme. In addition, the Corporation is
currently investigating supplying home ownership education on-line.
Numbers of Low Deposit Rural Lending loans
120 Around 11,000 people have attended Low Deposit Rural Lending (LDRL)
education courses provided since 1995, and 1,600 loans have been approved.
However, courses are no longer provided, and all remaining support contracts
expired at the end of September 2007. A decision to extend support contracts is
still being considered as part of the lending products review. It is expected that all
valid LDRL certificates will have expired by end of June 2008.
Supporting other housing providers
121 Building the capacity of other housing providers has been adopted as part of a
number of programmes and services in response to differing needs and
circumstances. The Corporation helps individuals and communities to meet their
own housing needs through:
• Housing Innovation Fund grants
• the Rural Housing Programme
• Healthy Housing
• Community Renewal. the
Community Group Housing
122 The Corporation’s Community Group Housing service lets approximately 1,500
properties to community social service, health and education providers, and
provides rent support
123 The ongoing challenge for Community Group Housing (CGH) service providers is
to fund their services. In addition to the funding provided by Government, CGH
providers may seek contributions through community grants, residents’
Accommodation Supplement payments and rental income, and from fundraising.
124 From time to time, some CGH providers experience financial difficulty meeting rent
payments and approach the Corporation for rent relief.
125 The Corporation has introduced a new Rent Support service for eligible CGH
tenants. The new Rent Support service results in a more equitable distribution of
the rent support fund. The rent support fund is capped at $4.5 million per year (not
expected to be fully allocated in 2007-2008).
126 Research and evaluation play an important role in informing the Corporation’s
operations and policy development. The Corporation’s Research and Evaluation
Team focuses on the Corporation's needs, while the Centre for Housing Research
Aotearoa New Zealand (CHRANZ) serves the housing sector as a whole.
127 CHRANZ is a semi-autonomous body with a management Board, appointed by
and accountable to the Corporation’s Board. CHRANZ delivers and promotes
independent, high quality and relevant research to inform housing policy
development and practices. CHRANZ’s funding is based on direct funding from
the Corporation and co-funding for research from various Government agencies,
including the Corporation.
Responding to key issues and influences
128 People are struggling to service housing costs across all forms of housing. The
emerging issues can be broadly summarised as declining housing affordability,
limited housing supply, and the ongoing and changing demand for social housing.
129 The Corporation continues to be the major provider of social housing and it
continues to expand the state housing portfolio to address demand. Additionally,
the Corporation has a range of strategies to maintain and develop the wider social
housing sector, and forms partnerships with many providers to ensure that they
have the capacity and capability to meet housing need.
Housing Affordability Bill
130 The draft Affordable Housing Bill would enable territorial authorities to use
regulatory tools and incentives to help increase the supply of affordable housing
and promote a variety of housing sizes, tenures and costs. The Bill also contains
provisions to retain affordable housing and restrict the future use of covenants
aimed at excluding social and affordable housing from neighbourhoods.
131 Affordable housing is defined in the Bill as housing that is priced so that people on
low to moderate incomes are able to meet their housing and other essential basic
living costs. The price of an affordable house will vary region by region, just as
incomes vary from region to region. The Bill covers both rental and home
132 The draft Bill balances the need of the community for affordable housing with
developers’ needs for a consistent and predictable legislative framework.
Territorial authorities would be able to develop affordable housing policy, based on
the evidence of affordable housing need in the district or region. The policy would
outline how territorial authorities can require an affordable housing contribution of
either houses, land, money, or a mix of these, from residential and commercial
Declining rates of home ownership
133 Home ownership is an important aspect of many New Zealanders' lives. Most
New Zealanders aspire to own their own homes. However, an increase in house
prices and interest rates, and a change in consumer spending behaviour has
contributed to making home ownership less affordable. Home ownership rates are
declining. The national home ownership rate decreased from 74 percent in 1991
to 67 percent in 2006. Average house prices have increased by 75 percent since
2003, whereas incomes have increased by 24 percent.
134 The Crown has a range of initiatives that seek to assist aspiring homeowners in
buying their first home. These include:
• The Welcome Home Loan
– an insurance product that provides lenders with
insurance against any loss on sale to enable them to provide low or no deposit
home loans to first home buyers
– deposit assistance. From 2010 first home buyers who are part of
KiwiSaver will be able to access financial assistance of between $3,000 and
$5,000 to assist them in buying a home. The assistance is tied to KiwiSaver
to promote savings behaviour
• Shared Equity
– A pilot programme is planned to assist people living in more
expensive parts of New Zealand to buy a home. The Crown will provide up to
30 percent of the purchase price interest free as an equity loan, and share in
any increase in value when the house is sold or the equity loan repaid
• Home Ownership Education
– a programme that provides people with the
skills and knowledge they require to buy and own their first home
• The Accommodation Supplement (Ministry of Social Development)
homeowners and first home buyers are eligible for financial assistance
through the Accommodation Supplement to help service mortgage
repayments and/or cover other housing costs.
A demonstration effect
135 The Corporation is a small player in the home ownership market. One way it can
influence the market more broadly is through a demonstration effect. That is, the
Corporation can lead the market in piloting innovative new home ownership
programmes, demonstrating their commercial viability to other providers. The
Welcome Home Loan is a positive example of this.
The rental market
136 The proportion of households in the private rental sector increased from 22 percent
in 1991 to 28 percent in 2006. The growth of the private rental sector is mainly
due to the falling home ownership rate. New Zealanders want security of tenure,
and those that cannot achieve this by owning a home, seek to duplicate it in the
137 The Department of Building and Housing is responsible for administering the
Residential Tenancies Act. This is the legislation that governs the rights and
obligations of landlords and tenants. The Department also ensures that tenants
and landlords understand their obligations and that they know the processes that
need to be followed to resolve any disputes. The Residential Tenancies Act is
currently being reviewed by DBH.
138 However, the rental market itself is affected by increases in housing prices and
interest rates. Increases in rental income have not kept pace with increasing
house prices, resulting in lower returns for commercial landlords.
139 The Crown provides the Accommodation Supplement through the Ministry of
Social Development to assist with rent and mortgage repayments.
Supply of housing
140 The Crown has the following initiatives in place to address the supply of affordable
housing in the medium to long-term:
• Affordable Housing Bill
– As noted, above
– An integrated urban development that will include a mix of state
and private housing, including affordable homes for first home buyers. It is still
in the planning stages with the first houses due to be built in 2009 subject to
resource consents. There will be approximately 3,000 houses built in total,
including up to 15 percent affordable housing and up to 15 percent social
– A long-term project to provide a mix of social, affordable, and
market-rate housing, improved community services and a reduction in the
concentration of state housing. Cabinet agreement will be sought in February
• House Prices Project
– A fixed-term inter-agency project under the
management of the Department of the Prime Minister and Cabinet to examine
what might be done to moderate house price increases, stabilise the volatility
of the market, and mitigate the negative consequences of price movements. It
is expected to focus on what might be achieved using supply side initiatives.
The project started in August 2007 and is required to report by Christmas
2007. The Corporation is involved in both staffing and steering the project.
The other agencies involved are the Department of Prime Minister and
Cabinet, Treasury, Reserve Bank and the Department of Building and
141 Multiple factors contribute to the increased cost of house prices; for example,
population growth, immigration, investment and land-banking. Rising land prices
contribute the most to the increased housing costs.
142 Increased housing demand and reduced land availability, particularly in Auckland,
have resulted in the Corporation taking a more active property development role to
secure land and/or redevelop appropriate housing at a reasonable cost to meet
143 Auckland’s land costs have increased faster than building costs despite reduced
section sizes and increased average building floor areas.
144 In Auckland, the zoning and growth guidelines in the Auckland Regional Growth
Strategy are designed to limit urban expansion and encourage intensification
within existing growth nodes and corridors. For example, the designation of
Residential 84 zones in Auckland City provides the opportunity for the Corporation
to increase density and provide more housing in Tamaki.
Building mixed tenure communities
145 Mixed tenure communities provide a mixture of social, private and affordable
housing. Mixed tenure communities are increasingly recognised as an important
precondition for achieving successful and sustainable housing for disadvantaged
families. Residential environments need to be well designed and well managed,
while providing access to the full range of high quality services including leisure
and employment opportunities.
146 Both the Corporation’s operational experience with tenants and an increasing body
of research indicate that multiple problems arise when disadvantaged households
are concentrated in particular neighbourhoods.
147 The Corporation’s Community Renewal Programme operates in areas of
deprivation with high concentrations of social housing and creates more mixed and
balanced communities that are sustainable. The Community Renewal programme
was set up in July 2001 and currently operates in six areas - Aranui
(Christchurch), Porirua (Wellington), Fordlands (Rotorua), Clendon (South
Auckland), Talbot Park (Glen Innes) and Northcote (North Shore). The
Corporation understands that community engagement and buy-in is critical in
achieving good housing outcomes in these areas.
148 The Corporation will also be leading the development of mixed communities in
Tamaki and Hobsonville.
Improving the use of state housing to meet housing need
149 The highest demand is for is for two bedroom and four or more bedroom
properties. Most state houses have three bedrooms and the Corporation
continues to reconfigure the state house portfolio so that it is able to better address
demand from smaller and bigger families requiring state housing. Overcrowding
remains a significant problem and the Corporation addresses this through its
Healthy Housing Programme and ongoing modernisation work. In addition, it also
transfers tenants to houses that are more fit for purpose. Under-occupancy,
4 Increased density of 3-4 levels.
vacancies and overcrowding are key performance indicators the Corporation uses
to measure its performance.
150 The Corporation is currently conducting work and research on a 'housing
pathways' framework. The framework will lead to improved Corporation tenant
profiling and tenancy management practices. The framework adopts an
innovative life-course approach to people's housing needs. It seeks to identify the
patterns of change experienced by different kinds of households in housing tenure
and suitability over their lifetimes.
151 The Corporation is also currently surveying tenants to identify those who are
under-occupying houses or paying market rent. The information collected will help
the Corporation encourage and support these tenants to move in the future should
they wish to.
152 The number of better use transfers resulting in tenants moving from large
properties to more suitable accommodation from 1 July 2006 to 30 June 2007 was
331 (against a budget of 300), resulting in a net gain of 394 bedrooms – equivalent
to 131 three-bedroom houses. Assuming a national average three-bedroom house
price of $300,000, this equates to a savings of $39.3 million in capital expenditure
over the last financial year.
153 The Corporation aims to strengthen its leadership in response to Māori housing
issues across the sector, and recently launched ‘Te Au Ora’ the Māori Strategic
Plan for 2007- 2012 which aims to:
• form partnership relationships with iwi and Māori that are strategic and
mutually beneficial the
• provide strategic planning to support processes and housing solutions that are
appropriate, effective and address the diverse needs of Māori
• build the capability and capacity of the Corporation’s staff and organisational
processes to improve day-today business with Māori.
154 The Corporation addresses Māori housing need with various initiatives including:
• the Rural Housing Programme
• assisting development of housing on Māori freehold land.
155 Māori face a number of barriers to accessing good quality housing. These issues
• ownership arrangements
• ability to service and repay debt
• ability to provide security against which funding and services can be provided.
156 These are not insurmountable barriers, but at present provide significant
impediments to developing housing options for Māori so they can make use of
their freehold land resource. The Corporation is working on options to partner with
iwi and other key stakeholders to address these barriers. These will involve
utilising both Crown and iwi/Māori resources to provide the necessary means to
build, buy or lease houses for Māori to live in. Proposals include developing
demonstration partnerships, amending Corporation lending products, providing
innovative affordable housing products, making possible legislative changes and
furthering research into Māori demand for housing.
157 Significant progress has been made implementing the Māori Strategic Plan. A
quarterly reporting framework has been developed to inform the Board and Māori
Capability Committee and the first report against the plan indicates that all three
key performance measures are ‘on track’. There is no appropriated funding for the
implementation of the Māori Strategic Plan as all initiatives are being progressed
through baseline funding.
158 Housing stock across the country is of variable quality. The Corporation has
focused its attentions in Northland, the East Coast, and the Eastern Bay of Plenty
(NECBOP). This focus was initially in response to a spate of house fires that
exposed a problem with housing quality in this area.
159 The Corporation developed the Rural Housing Programme to address health and
safety issues in the area by providing essential repairs and new infrastructure. In
addition, efforts have been made to develop capacity in local communities to
undertake repairs themselves.
160 Since 2001, the Corporation has completed approximately 1,800 housing
interventions in the Northland, the East Coast, and the Eastern Bay of Plenty
areas, but it is estimated that this work accounts for only about 20 percent of the
substandard housing within these three regions. The number nationally is unclear.
161 The Corporation recommends accelerating the provision of essential repairs in
NECBOP, although this recommendation is subject to budget bid and Cabinet
decisions. In addition, it will work to ensure the affected communities have access
to the full range of social services available to them. The Corporation is working
with communities to build capacity and capability to provide and maintain good
quality housing stock. However, the problem of substandard housing will not be
eliminated through this programme alone.
Maintaining and modernising state housing
162 About half of the Corporation’s state houses are more than 38 years old and
require significant on-going maintenance. State housing also requires
modernisation to avoid obsolescence. The ongoing maintenance, modernisation
and energy efficiency retrofitting of state housing will ensure that the state housing
stock meets present and future tenants’ needs. Expenditure on maintenance and
modernisation over the last five years has been $759.5 million and $123.1 million,
163 The Housing Corporation Act 1974, as amended in 2001, requires the Corporation
to, "exhibit a sense of environmental responsibility by having regard to the
environmental implications of its operations". Information
164 The Corporation meets this obligation through a range of initiatives including:
• energy efficiency initiatives (Energy Efficiency Retrofit programme, the Energy
Efficiency Conservation Authority partnership, Rural Housing Programme
energy efficiency retrofits)
planning initiatives (Sustainable Cities, Hobsonville, Papakura)
• Healthy Housing initiatives (Housing and Health Research Programme,
Housing, Crowding and Health study, and the Affordable Housing initiative).
Financial assistance to owners of leaky homes
165 The Corporation works with the Department of Building and Housing to provide
bridging finance to owners of leaky homes. It is a two year pilot and evaluation to
gauge the need for financial assistance prior to home owners seeking decisions
through the Weathertight Homes Tribunal. Many owners face substantial repair
costs but are unable to access the funds required to complete repairs. The
Corporation provides finance to these people to fix their homes. Once the home is
repaired, the owner is in a much better position to establish the costs they wish to
claim through the Weathertight Homes Tribunal.
166 The future of assistance to owners of leaky homes will be based on findings from
the pilot evaluation due to be reported to you late 2008. However, initial demand
for the product is high, partly due to the higher than anticipated average cost of
repairs per house.
167 The Department of Building and Housing has a range of initiatives designed to
enhance Weathertight Services and to improve the education and information to
home owners about housing quality.
Section B – Part Two
168 Part Two provides a quick reference summary to the key programmes run by the
Corporation. The following commentaries and tables summarise the purpose and
background of the programmes, describe how they work and show the results they
Key Corporation programmes
• Social Allocation System
• Income-Related Rents
• Accommodation Supplement
• Community Group Housing
• Housing Innovation Fund
• Auckland housing development
• Community Renewal
• Welcome Home Loan
• Low Deposit Rural Lending
• Rural Housing Programme
• Healthy Housing Programme
Part Two – Key Corporation programmes
The Social Allocation System
The Corporation allocates state housing by ‘housing need’, for example, to people who
cannot access or sustain housing in the private sector that is suitable, adequate and
There are not enough state houses to meet the demand from people with housing needs.
The Social Allocation System (SAS) prioritises allocation by need.
SAS assesses eligibility based on residency, income, assets and a household’s level of need.
Applicants are assessed on:
the affordability of their current housing
the adequacy of their current housing
the suitability of their current housing (house size and overcrowding, for example)
their ability to access housing
their ability to sustain housing.
Applicants are given a priority ranking as follows: A At Risk:
Severe and persistent housing needs that must be addressed immediately B Serious Housing Need:
Significant and persistent housing needs C Moderate Need:
Moderate housing needs D Low Level Need:
Low level housing needs. Information
Results to date:
Review indicates that SAS provides a good local ranking, but is not necessarily consistent
across the country. For example, there are more ‘A’ priority households in Christchurch than
None. The Board has recently agreed to a project that will explore options to better manage
low priority applicants.
Ability to prioritise
Having ‘C’ and ‘D’ categories when these people are unlikely to be housed.
Low income state house tenants are currently charged an Income-Related Rent (IRR).
In 1999, IRR was reintroduced for state house tenants with low incomes, so they no longer
needed the Accommodation Supplement.
Under IRR, low income Corporation tenants pay no more than 25 percent of their income in
rent5. Low income has been defined as the relevant rate of National Superannuation.
Tenants with incomes above the National Superannuation low-income threshold will pay
progressively more than 25 percent of their income, until the market rent is reached. About
90 percent of state house tenants pay an income-related rent.
In 2006/2007, the Government spent $436 million on the income-related rent subsidy and it
has budgeted $465 million in 2007/2008. The average cost per household is $7,330 a year.
As at 30 June 2007, approximately 59,500 tenants (91 percent) pay IRR.
5 Minimum rents apply
The Accommodation Supplement (AS) assists low income households (except state
tenants) with accommodation costs.
The AS was introduced in 1991 and replaced the Accommodation Benefit, which had been
in place since 1972. The Ministry of Social Development (MSD) administers the AS. Policy
advice is provided by both MSD and the Corporation.
The Working for Families package (2004) included the following changes to the AS:
removal of the AS abatement for beneficiaries on the first $80 a week of non-benefit
lower AS entry thresholds for non-beneficiaries
increased income thresholds for non-beneficiaries
increased AS maxima
an increase in the number of AS areas from three to four.
A non-taxable cash payment to New Zealand residents who meet income, asset and
other criteria, and whose accommodation costs exceed the entry threshold
Applicants are required to meet a portion of their accommodation costs before they
receive a subsidy. The supplement provides a subsidy of 70 percent on
accommodation costs above the entry threshold, up to a maximum amount. Maxima
vary by family size and AS region
The relevant legislation is Section 61 of the Social Security Act 1964 and the Student
Allowances Regulations 1998.
A review of the AS by MSD and the Corporation over 2005/2006 and 2006/2007 explored:
adjustments to Accommodation Supplement areas and maxima to improve housing
affordability for those facing the most difficulties finding affordable housing
a targeted communications strategy to increase awareness of the Accommodation
Supplement amongst groups of working people who are eligible, but are not using
As with other demand-driven policy, economic and social changes affect the overall
demand and cost of the AS. For example, the housing market also affects AS expenditure,
as house price increases affect mortgage repayments and may flow through to rent
The appropriation in Vote Social Development for the AS is $908.6 million a year for
2007/2008, at an average weekly payment of about $69 to each recipient.
AS expenditure climbed throughout the mid-1990s before dipping with improved economic
conditions, the introduction of income-related rent in 2000/2001 and Working for Families
assistance in 2004.
Community Group Housing
The Corporation’s Community Group Housing (CGH) programme helps community groups
and iwi provide access to community housing for people with specialist housing needs.
Service providers find it difficult to rent properties due to a lack of specialist housing in the
private sector, as well as the high cost of modifying housing and compliance issues.
Using appropriated funding, the Corporation works with Government funding partners
(Ministry of Health and the Department of Child, Youth and Family Services) to provide
appropriate housing, and sometimes rent support.
The Corporation also helps in other ways. For example, by arranging leases of suitable
properties, and helping service providers to access private sector housing or to buy their
Results to date:
The Corporation owns or leases approximately 1,500 properties that are rented to service
providers. It has an annual programme to supply an additional 40 to 50 properties.
The rent relief fund ($4.5 million a year) is a stop-gap response to help service providers to
continue providing housing. The Corporation is working with funding partners and service
providers to determine a long-term approach.
Currently, the bulk of CGH properties are used for people with mental health issues (48
percent) and disabilities (32 percent).
Residential: 1,413 units
Non-residential: 93 units
Housing Innovation Fund
To support the growth of community-based, iwi and local government social housing for low and
The Housing Innovation Fund (HIF) was established because of the:
demand for social housing
limited Government funding of community-based organisations that provide residential
people with serious housing and other needs, such as mental illness or disability, whose
housing needs may be better met by community or iwi providers.
The Corporation provides loans and grants to community-based organisations and local
authorities to build capacity, and acquire, build or purchase housing. Act
Results to date:
The findings of the programme review, (from inception in December 2003 to September 2007)
recipient groups and sector stakeholders support HIF
short-term outcomes achieved so far include:
− tailored housing responses to specific client groups
− non-government resources going into social housing
− growing involvement of Māori, Pacific peoples and housing trusts
− innovative responses by local authorities.
The success of the programme means the Government has agreed to extend funding another
year to 2008-2009.
The capacity of the community sector to develop and manage social housing means demand
for funding exceeds supply. Official
Agreement will be sought in the new year to extend funding beyond 2008-2009 as part of the
review of the role of non-government social housing sector.
Sector capacity is strong and needs long-term support.
Demand significantly exceeds available funding. Alternatives to providing capital lending need
to be analysed and developed.
Community Housing Aotearoa (peak body for third sector housing providers)
incorporated in 2005/2006
strategy for the extension of HIF beyond 2007
Government agreed to extend funding a further year to 2007-2008.
58 capacity building grants were allocated
12 conditional grants were accepted
19 loans were accepted.
A further 22 capacity building grants, six conditional grants and 12 loans are currently forecast
for the 2007/2008 financial year.
Housing in the Auckland region – (Table 8 to Table 10)
The Corporation has acquired land in Papakura to develop an integrated community including state
In June 2004, the Corporation bought 24.4 hectares of land as part of a strategy to meet an
increasing demand for social housing in the Papakura area.
It is working with a developer, Papakura District Council, the Ministry of Education and Ministry of
Defence to develop the most appropriate urban design solution for the site.
The development is expected to yield around 400 to 450 housing units and the Corporation will take
up to 30 percent of these.
The key project objectives are to:
• demonstrate a benchmark project for partnership in the provision of public and private housing
• create a balanced community comprising of public sector tenants, home owners and private
sector investors and/or tenants
• create an environment that enhances the wider neighbourhood and district in which the project
The Corporation has signed a Development Agreement with a development partner who will design
and deliver the project in conjunction with the Corporation.
The development of Hobsonville will illustrate how good urban design and affordable housing are
compatible with commercially-driven land and property development.
The Corporation, as an agent for the Crown via the Housing Agency Account, has acquired 111
hectares of land (part of the overall 167 hectare site), and is working closely with Waitakere City
and other Crown agencies to develop a sustainable integrated urban community. The Corporation
expects that the site will deliver:
an estimated 3,000 homes at densities required for a growing Auckland in a mix of dwelling
types including apartments, townhouses, stand-alone housing and mixed
a mix of high-, middle- and lower-income housing, including about 500 social rental housing
units and about 500 opportunities for modest-income households to own their own home
careful design of internal road networks and connections with the region’s transport
infrastructure. Special consideration will be given to public transport
sustainable waste and water infrastructure, which minimises down-line capacity and
schools, heritage areas and reserves
employment opportunities linked to the Waitakere-led Hobsonville Marine Industry Precinct
and adjacent Hobsonville Village Centre with appropriate residential/commercial buffer zones
and common roadways
commercial returns commensurate with the Government’s investment.
The Corporation’s Board has formed a wholly-owned subsidiary to manage the land and any future
development options agreed by Ministers. The role of the Hobsonville Land Company Limited will
be to effectively manage the Hobsonville land on behalf of the owner the Crown and with a
commercial development partner deliver the required mix of social and commercial objectives, with
a view to:
optimising the commercial return on the land investment
protecting the integrity of the Government’s vision for Hobsonville.
Approval to proceed with the development of Precinct One and approval for the number and class
of dwellings/buildings. The financing mechanism was agreed by Cabinet, but some reconsideration
of this is required and further advice will be provided shortly.
The Corporation, as an agent for the Crown via the Housing Agency Account, has acquired land in
Weymouth to develop an integrated community including state housing.
Early in 2004, the Department of Child, Youth and Family announced that it no longer required some
land at Weymouth Road, Manukau, a ‘greenfields’ site of 15.62 hectares. The site is adjacent to a
Child, Youth and Family Service Residential Care and Protection Centre.
On 7 February 2006, the Corporation Board Chair wrote to the Minister of Housing and the Minister
of Finance seeking approval for the transfer of land from the Department of Child, Youth and Family
to the Corporation and Ministry of Education for state housing and education purposes. In the
proposed split, 10 hectares was to go to the Corporation for state housing and the remaining 5.62
hectares to the Ministry of Education to build a school.
The initial concept included:
a kura kaupapa secondary school
160 sections for a mix of stand-alone family homes, townhouses and housing for small
families and older people
a park, wetland area and a foreshore reserve.
The proposed housing mix for the 160 sections was:
80 state housing units
50 home ownership units
up to 10 sections for Habitat for Humanity’s self-build programme
20 sections made available for sale to other modest income home owners.
The Corporation's case for utilising the land at Weymouth included:
a high demand for state housing in the area
proximity to schools, shops and public transport
suitability for development with an operative zoning of ‘main residential’, which allows for small
the lack of other suitable land in the area
a potential yield of up to 80 new state houses without significantly increasing the concentration
of state tenants in the area
savings of up to 20 percent in comparison with the acquisition of new state housing in similar
The opportunities the Weymouth development provides include:
new housing in an area where the Corporation needs more stock
partnership with the third sector to offer home ownership to moderate-income households
measurable savings for the Crown
the application of good urban design principles
a demonstration of how state housing can be integrated into new communities.
Currently, subject to resource consent requirements, the Corporation expects that approximately 200
new homes will be built with about 25-30 percent being retained by the Corporation as social
housing and the balance being a mix of affordable/assisted home ownership and sales to the
The Corporation is currently finalising the business case for the project with the New Zealand
Housing Foundation which is the preferred development partner. This partnership is subject to
agreement on the commercial arrangements and preferred design outcomes for the project. This
document will be considered by the Board and Ministerial approval sought.
The Community Renewal Programme aims to reduce social exclusion and foster strong, sustainable
communities in areas of very high deprivation and high concentrations of state housing.
Reducing social exclusion requires partnerships to address the community renewal cornerstones of the
physical environment, community culture, social support and economic sustainability. Community
Renewal projects have demonstrated the benefits of government agencies, local authorities and
communities collaborating to achieve joint outcomes. The programme works collaboratively across the
Corporation to ensure efficient use of resources.
The Corporation officially launched the Community Renewal programme in October 2001. The six
Community Renewal projects are in Eastern Porirua (Wellington), Fordlands (Rotorua), Clendon (South
Auckland), Tamaki (Glen Innes/Panmure, Auckland), Northcote Central (North Shore) and Otangarei
(Whangarei). Another project in Aranui (Christchurch), has been completed and transferred back to
mainstream business. A project in Wiri is under development, and one in Papakura (both South
Auckland) is under consideration. The Tamaki project was initiated with a demonstration project in the
Talbot Park precinct (see below for the future of Tamaki).
Programme objectives are to work with the community, councils and agencies to:
• improve and enhance the physical environment and amenities
• provide targeted needs-based tenancy and property management services
• implement community led solutions
• create links to programmes to enhance employment and business growth
• provide access to affordable and appropriate community services and facilities
• improve neighbourhood safety and reduce crime
• build social networks to facilitate resident support of each other.
2.578 (excl GST)
An Outcomes Evaluation was undertaken between September 2005 and June 2007. The evaluation
findings showed the programme making progress towards all its agreed outcomes. Highlights from the
key findings are:
• projects engaged with their local communities
individuals more empowered
• higher resident pride and ownership
• reduced social exclusion fostering stronger sustainable communities
• improved physical environment
• improved outsider perceptions of Community Renewal areas
• more available and responsive Housing Services.
The Corporation is the lead agency in an intersectoral initiative to address social disadvantage in
Tamaki, an area covering the suburbs of Panmure and Glen Innes in East Auckland. Tamaki is an area
of 5,000 households characterised by a high proportion of large families and single person households
with high and complex needs. The area has a very high level of state housing (55 percent), a very low
level of home ownership (28 percent) and a low level of private rental housing (17 percent).
Adding further state housing in Tamaki, without widening the mix of tenures and incomes (particularly
introducing more opportunities for home ownership), risks compounding existing concentrations of
deprivation in the area. Key features of the Tamaki Transformation Programme include:
• creation of a sustainable mixed tenure, mixed income community, including increased
opportunities for affordable home ownership
• full engagement with the local community in developing an integrated multi-agency programme,
with a focus on quality urban design
• working closely with state house tenants to ensure they are properly housed during the
progressive redevelopment of Tamaki.
Welcome Home Loan
The Mortgage Insurance Scheme (marketed as the “Welcome Home Loan”) is intended to help
modest income earners on the margins of commercial finance access mortgage finance to buy
House prices are rising faster than incomes. Commercial lenders require five to 20 percent
deposits depending on the location of purchases. There is increasing household debt and
many people are having difficulty saving deposits.
The Corporation provides mortgage insurance to commercial lenders. The insurance premium
is currently set at three percent of loan value, of which one percent is paid by the borrower and
two percent by the Government.
Results to date:
the 3000th Welcome Home loan was advanced in September 2007
since inception one claim has been made
criteria were amended in 2006 to make the Welcome Home Loan more accessible.
The Corporation regularly reviews criteria to reflect market conditions.
MIS minimises the deposit barrier for first home buyers. However, it is the ability to meet
ongoing servicing requirements that precludes most households from home ownership.
A market correction may reduce the need for this product or lead to defaults.
The Corporation’s actuaries consider the premium reserves as sufficient to meet claims in
almost every situation. The MIS has not affected the Corporation’s ability to service debt;
Standard and Poors have given it a debt issuer rating of AA+ with a positive outlook.
2005/2006: Actual $3,300,000
2006/2007: Actual $4,018,000
2007/2008: Appropriated $6,200,000
2005/2006 Actual volume: 791
2006/2007 Actual volume: 1,070
2007/2008 Estimated volume: 900
Low Deposit Rural Lending and Home Ownership Education
Low Deposit Rural Lending (LDRL) aims to:
educate low and moderate income earners so they can make an informed decision about
buying a home in a rural area
provide access to low deposit mortgage finance to enable people to buy a house in some
rural areas of the North Island.
This product is now being managed with a view to it no longer being supplied. Courses are no
longer provided and all remaining support contracts expired during September 2007. A decision
around continuing to supply support contracts is to be made shortly. All valid LDRL certificates
are due to expire by June 2008.
Insufficient and low quality rental housing in the early 1990s provided the rationale for increasing
home ownership in some rural areas of the North Island. Barriers for buyers included:
commercial lenders requiring 10 to 20 percent deposits depending on a property’s location
low incomes combined with lack of understanding of how to achieve and sustain home
counselling and advice
loan with three percent deposit.
approximately 11,000 people have completed courses
approximately 1,600 low deposit loans have been approved.
Funding ceases in 2008. Decisions will be needed on whether LDRL contracts get rolled into the
universal Home Ownership Education programme.
low numbers taking on loans due to increased prices in rural markets and interest rate
increases. Lower income households are now excluded from the market
loan targets are now inappropriate given rising market prices
lack of appeal of papakainga (multiple-owned land) option due to poor resale value
differing levels of ability between service providers.
Growth from three service providers in 1994 to 14.
38 loans in 2006/2007
848 course graduates in 2006/2007
Rural Housing Programme
In 2001, Cabinet agreed to the elimination of substandard housing in Northland, East
Coast and Bay of Plenty (NECBOP). It also agreed that the policy response should
an immediate housing response
a (longer-term) social development approach
Around 6,000 owners of privately-owned dwellings in rural locations across Northland, East
Coast and Bay of Plenty require assistance to ensure safe and healthy living conditions.
The Rural Housing Programme (RHP) came into existence as a response to deaths in fires
in substandard rural homes in 2000 and 2001.
The four interventions used to address severely substandard houses in rural RHP areas
providing state rental properties (including through the Community-Owned Rural
Rental Housing Loans programme)
repairs to existing properties (through essential repairs suspensory loans, home
improvement loans and Low Deposit Rural Lending)
helping people buy another home
capability building in the community (through housing improvement project zone
grants, Housing Innovation Fund grants).
Results to date:
About 1,800 essential repairs in RHP regions
350 suspensory loans for essential repairs in regions outside RHP
180 infrastructure suspensory loans
New Zealand Fire Service has installed over 75,000 smoke alarms in at-risk houses
in NECBOP areas.
This [programme will cease in July 2008 unless funding is approved in the 2008 budget.
Historic issues with the standard of repairs has led to the implementation of a new service
Essential repair NECBOP loans approved
Essential repair loans approved in other targeted locations
Infrastructure loans approved
State rental acquisitions
Healthy Housing Programme
The Healthy Housing programme aims to:
reduce the risk of housing related health problems
improve availability and quality of state housing for larger families
improve access to health and social services
increase awareness of healthy living.
The Healthy Housing programme is a joint initiative between the Corporation and District Health
Boards (DHBs) in Counties Manukau, Auckland and Northland. The project in Northland will be
completed in 2007/2008. The programme will extend to other DHB regions. The next region to be
prioritised is Hutt Valley, where Healthy Housing is scheduled to go live in 2008.
The impetus for the programme came from research conducted in Auckland during the late 1990s,
which showed that living in a crowded house is an important determinant of meningococcal disease,
respiratory diseases, tuberculosis, rheumatic fever, skin infections and mental illness.
Healthy Housing was originally designed to reduce the risk of infectious disease, particularly
meningococcal disease. Over the life of the programme, it has evolved to reduce housing-related
hospitalisations, particularly for crowding-related diseases, and improve the overall health and well-
being of participating families.
Priority is given to areas with high rates of hospital admissions for potentially avoidable
hospitalisations, high density of state houses, high social deprivation and high crowding. Public Health
Nurses and Corporation staff work together to assess tenants’ health and living situations. The
evaluate the condition of the property and the appropriateness of the home for the occupants
identify housing-related health issues
identify and discuss health problems and risks and provide tenants with information about health
provide access to health and social services.
The Corporation takes action to address identified housing needs, including transferring families to
more appropriate housing, extending existing houses for larger families, addressing any health and
safety issues, making design improvements, or adding insulation and ventilation.
Public Health Nurses refer families to health, social service and community providers to address
Since it began in 2001, the programme has assessed 5,500 families and provided housing assistance
The evaluation of the programme confirmed that Healthy Housing has been successful in improving
housing conditions, improving health, reducing crowding, improving tenant knowledge of healthy living
practices, and improving access to primary health care and social services. The evaluation also shows
that participants have increased family connectedness and community connection as a result of the
programme. The results include a 37 percent reduction in hospital admissions for housing related
conditions for families who have been through the programme.
Healthy Housing has appropriated funding for three years from 2007/2008. The capital appropriation
of $7.000 million per year is $3.000 million less than total available capital funding in 2006/2007, and
$1.250 million less than the capital spend in 2006/07.
$9.8 million (this includes $1.57million of reconfiguration
budget used to deliver 10 Healthy Housing extensions)
Properties bought 2
Transfers 92 (includes part-households transfers)
Moved to private sector 12
Section B – Part Three
171 Part Three provides an overview of the way in which the Corporation is governed
and structured, outlines a number of commonly occurring issues and their
mitigations, and sets out the Corporation’s financial management processes.
Additionally, a series of tables are included to provide an ‘at a glance’ summary of
key regional statistics.
• The Corporation’s governance and structure
• General issues
• Financial management
• Regional Snapshots
Part Three - Organisational information
The Corporation’s governance and structure
172 The governance framework for the Corporation involves four key parties:
Parliament, Ministers, the Board and the Corporation’s management team.
Role of the Minister
173 As Minister of Housing, you are both the Vote Minister for Vote Housing (which
funds both the Department of Building and Housing and Housing New Zealand
Corporation) and Responsible Minister for the Corporation, along with the Minister
of Finance. As the Vote Minister, you are responsible for:
• managing the ownership interest in the Corporation
• policy advice
• Vote and budget issues.
174 The primary relationship between the Government and the Corporation is between
Ministers and the Corporation’s Board, with the Minister of Housing managing the
relationship between the Board and the Government. You are the Corporation’s
first point of contact on all matters, except for borrowing, which is the responsibility
of the Minister of Finance.
175 As Responsible Ministers, you and the Minister of Finance are jointly responsible
• conveying the Government’s expectations to the Corporation
• overseeing of the Statement of Intent and agreeing to use of the Corporation’s
appointing and dismissing members of the Board
• monitoring the Board’s performance
• monitoring the Corporation’s financial performance.
Role of the Board
176 The Corporation Board and Executive have a long-standing commitment to good
corporate governance. The Board is responsible for the overall governance of the
Corporation and for managing it according to its legal mandate.
177 The Board provides leadership and control for the organisation. It selects,
appoints and monitors the performance of the Chief Executive. The Chief
Executive is responsible to the Board for the efficient and effective running of the
Corporation, while providing leadership and direction to staff.
178 The Board comprises eight non-executive members. Each appointment is for up to
three years, with the possibility of further reappointment.
Pat Snedden, Chair
179 Pat Snedden was appointed to the Board in August 2000 and as Chairman
in October 2004. He chairs another of the Corporation’s subsidiaries, the
Hobsonville Land Company. Other public sector roles he holds include the
chair of Counties Manukau District Health Board, chair of Quality
Improvement Committee and directorships with Watercare Services Ltd and
the ASB Community Trust.
Lope Ginnen, Acting Deputy Chair
180 Lope Ginnen was appointed to the Board in July 2001 and chairs the Act
Board’s Assurance Committee. Lope is a barrister practicing family law in
Auckland and is frequently appointed as the ‘lawyer for child’ in Family
Court proceedings, particularly in cases that have domestic violence or
child protection aspects. Lope is a trustee of the Brainwave Trust, a charity
that raises public awareness of brain research about the importance of
early experiences on infant brain development.
181 Jo Brosnahan was appointed to the Board in December 2006. Jo
Brosnahan was the Chief Executive of the Auckland Regional Council. Jo is
the founding Chair of Leadership New Zealand. Jo has served on the
Board of NIWA and Northpower, and as Chairman of Central Institute of
Technology in New Zealand. She is on the boards of Leadership NZ, Asia
2000, the EEO Trust and Netball North Harbour.
182 Tony Paine was appointed to the Board in November 2004 and has
qualifications in social work and management. Tony has a background in
not-for-profit management and governance, and is the Chief Executive of
the Christchurch Arts Centre. Tony was previously the Chief Executive of
social housing provider Comcare Charitable Trust.
183 Greg Hinton was appointed to the Board in July 2005. Greg has a
background in property management and property development. Greg is
an executive director of NSI Management Ltd, a director of A2 Corporation
Ltd, and Chalmers Properties Ltd, as well as director of a number of private
184 Garry Wilson was appointed to the Board in September 2006. Garry retired
two years ago from the position of Chief Executive Officer of ACC following
a career in the public sector. Garry now operates as a professional director,
mentor and consultant. His involvements are quite varied ranging from charitable
organisations, state sector bodies and the private sector.
185 Colin Dale was appointed to the Board in September 2006. Colin retired
from Manukau City Council following 50 years Public Service and 21 years
as Chief Executive. He is Chairman of the Auckland Regional Migrant
Services Trust, the Auckland Physical Activity and Recreation Strategy
Trust and is a member of the Lottery Community Facilities Committee.
186 Sandra Lee was appointed to the Board in September 2006 and is currently
the Chair of the Māori Capability Committee of Housing New Zealand. She
also represents the Board on the Centre for Housing Research Aotearoa
New Zealand (CHRANZ) and has recently also been appointed to the
Board of Te Papa.
The Chief Executive
187 Dr Lesley McTurk is the Chief Executive of Housing New Zealand
Corporation. Lesley joined Housing New Zealand in January 2007 and is
working to fulfil the Corporation’s mission to provide New Zealanders with
access to decent homes, helping them to manage their own circumstances
and contribute to community life. Official
188 In her previous role as Chief Executive of Christchurch City Council, Lesley
demonstrated her commitment to performance excellence and building leadership
capability within organisations. The Council received the Business Excellence
Award for Local Government in 2006. Lesley moved to local government after 10
years in the health sector, where she led the Southern Cross Hospital network and
before that was Chief Executive of Auckland’s Mercy Hospital. All these
healthcare facilities gained accreditation awards under her leadership.
189 The Chief Executive is responsible to the Board for the:
• efficient and effective day-to-day running of the Corporation
• direct provision of policy advice
• content of budget submissions
• setting the direction for the Corporation and the broader social housing sector.
190 There have been significant changes to Housing New Zealand’s Executive Team
and organisational structure in recent months. A number of roles have been
disestablished and new ones created. The aim of the restructure was the creation
of a shared services model to ensure best practice by sharing information and
activities across teams, by better meeting Government requirements for reporting,
and by increasing accountability.
191 The new Executive Team structure lays the foundation to support the Corporation
• customer-focused and inclusive of communities
• transparent, accountable and efficient
• flexible and sustainable
192 Figure 2 below outlines the Corporation’s organisational structure and relationships
with the Ministers of Housing and Finance.
The Corporation’s organisational structure
i g M
i g N
a d B
i g R
a d B
a d C
i g Ch
i g O
i g G
me t &
i g G
Housing Corporation Act 1974
193 The Housing Corporation Act (HCA) established the Corporation as a statutory
corporation with its own governing Board. The Act was amended in 2001 as part
of a move to consolidate most of the Government’s housing functions into one
organisation. That is, the functions of the then Housing Corporation of New
Zealand, Housing New Zealand Limited and Community Housing Limited were all
brought together under the umbrella of Housing New Zealand Corporation.
194 In addition to the grouping together of these entities, the amendment to the HCA
also effectively transferred the housing policy function from the then Ministry of
Social Development to the Corporation. As a result of this transfer, the
Corporation became the agency with principal responsibility for providing housing
policy advice to the Minister of Housing.
195 The HCA established the Corporation Board and, together with the Crown Entities
Act 2004 (CEA), governs how the Corporation relates to the Crown and its
Minister. Before the CEA, the HCA had been the principal Act governing the
relationship between the Corporation and the Crown, setting out how the
Corporation’s Board was to operate. The recent enactment of the CEA has
repealed much of the HCA. The CEA now governs most aspects of the
relationship between the Corporation and the Minister, and sets out how the
Corporation’s Board, and other boards of Crown entities, are to operate. 1982
196 The HCA sets out the Corporation’s objectives and functions in section 3(b), which
are as follows:
(a) to give effect to the Crown’s social objectives by providing housing, and services
related to housing, in a businesslike manner, and to that end to be an
exhibits a sense of social responsibility by having regard to the interests
of the community in which it operates; and
exhibits a sense of environmental responsibility by having regard to the
environmental implications of its operations; and
operates with good financial oversight and stewardship, and efficiently
and effectively manages its assets and liabilities and the Crown’s
(b) to ensure that the Minister of Housing receives appropriate policy advice, other
advice, and information, on housing and services related to housing.
Housing Restructuring (Income-Related Rents) Amendment Act 2000
197 This Act amended the Housing Restructuring Act 1992 (HRA). It introduced
Income-Related Rents and addressed the social allocation of state houses.
198 Part 5 of the Act sets out the Income-Related Rents regime. The Act provides that
tenants of houses owned or let by the Corporation pay rent capped at a
percentage of their household income up to a certain threshold. Tenants whose
household income is above that threshold pay a market rent.
199 The Act:
• sets out the method for calculating Income-Related Rent
• provides for the Corporation to regularly review Income-Related Rents
• gives the Corporation powers where information provided by a tenant is
incorrect or incomplete
• establishes a right of appeal to the State Housing Appeal Authority where
tenants wish to appeal the Income-Related Rent calculated by the Corporation
• provides for the Crown to reimburse the Corporation for the difference
between the Income-Related Rent for a property and the market rent for that
200 Section 61 of the Housing Restructuring and Tenancy Matters Act 1992 (HRA)
enables the Corporation to apply criteria when allocating houses that may actually
discriminate on the grounds of marital status, disability or absence of disability,
age, family status, residency, income and property or assets where these factors
are relevant to the housing need of the applicant.
Housing Act 1955
201 This Act provides the Corporation with specific powers in relation to land. It allows
the Corporation to take land for housing purposes under the Public Works Act. It
also establishes what is known as the Housing Agency Account, a mechanism
under which the Corporation can manage Crown-owned land on behalf of the
Crown Entities Act 2004
202 The Crown Entities Act (CEA) covers all Crown entities. The Corporation is
described in Schedule 1 of the CEA as a “Crown Agent”. “Crown Agents” are the
category of Crown entities that are closest to the Crown and least autonomous of
the Crown entities.
203 The CEA is the principal Act that governs the relationship between the Corporation
and the Crown. Among other things, it provides for the Corporation to produce a
Statement of Intent, permits the Minister to give directions to the Corporation, and
restricts how the Corporation may borrow, invest and establish subsidiaries. The
Act also regulates how the Corporation’s Board is to function. It deals with matters
such as the appointment and termination of members, conflicts of interest,
quorums for meetings and Board committees.
Residential Tenancies Act 1986
204 The Corporation owns or manages over 68,000 rental houses. All of these
tenancies are subject to, and regulated by, the Residential Tenancies Act 1986
(RTA). The RTA is administered by the Department of Building and Housing.
205 The RTA governs the relationship between landlords and tenants of residential
properties in New Zealand. The RTA:
• defines the rights and obligations of landlords (including Housing New Zealand
Corporation) and tenants of residential properties
• established the Tenancy Tribunal to hear disputes arising between landlords
• established a fund into which all tenants’ bonds are held.
206 Like any Crown entity in New Zealand, the Corporation is subject to the full range
of legislation. In addition to the legislation above, the pieces of legislation that it
has frequent and significant involvement with are:
• State Sector Amendment Act (No.2) 2004/Public Finance Amendment Act
2004 including recent amendments
• Official Information Act 1982
• Privacy Act 1993
• Human Rights Act 1993
• Resource Management Act 1991
• Building Act 2004
• Property Law Act 1952
• Employment Relations Act 2000.
207 Housing New Zealand Corporation is New Zealand’s largest landlord managing a
state housing portfolio of nearly 68,000 homes. As the Government’s chief
provider of social housing, the Corporation’s management of tenancies and assets
is subject to significant public scrutiny. Whilst every effort is made to manage and
mitigate risks, the Corporation operates within an environment of social and
commercial tensions and issues will arise from time to time. The Corporation will
keep you informed of any pending issues at all times on a no surprises basis. The
following information is a summary of areas within the Corporation’s operations
where issues most commonly occur and sets out the mitigations in place to
208 Issues of interest at the moment are:
• high-value properties
• investigation referrals
• tenant debt
• protocols/agreements with the Department of Corrections
• properties affected by Leaky Building Syndrome
• consultant/contractor costs.
209 When the Corporation becomes aware of a tenant subletting a Corporation-owned
property, it takes a number of escalating steps to address the breach as follows:
• approach the tenant to discuss the situation
• issue a section 56 notice under the Residential Tenancies Act (RTA), giving
the tenant 10 days to remedy the breach
• take the matter before the Tenancy Tribunal to terminate the tenancy.
210 The Corporation investigates approximately 50 to 60 cases per year where it
suspects tenants are subletting; however, cases are not investigated if there is no
‘reasonable’ suspicion. From 1 July 2005 to 30 April 2007, the Corporation
confirmed 26 cases of subletting. Fifteen tenancies ended during the investigation,
six ended after the investigation, and in the remaining five cases the tenants
ceased subletting and retained their tenancies.
211 Confirmed cases of subletting in the past few years have been very small and
amount to less than 0.03 percent of total tenancies.
212 Concerns have been raised in recent years that there are 145 state houses valued
at more than $1 million. This is untrue, as the valuation quoted is the replacement
cost valuation for insurance purposes generally comprised of multi-unit building –
not the market value of the individual state houses. In reality, 91 percent of
Corporation properties nationally are valued under $300,000. There are 141
properties with a value of $700,000 or more, most of which are located in
Auckland. Of these, seven have a value in excess of $1 million. The significant
majority of the value is in the land, not the property.
213 Where the Corporation has identified high-value properties, it will consider a range
of asset management options, which include: retain as-is, redevelop the site,
and/or dispose of it and reinvest in more appropriate housing. One of the
Corporation’s objectives is to promote well-balanced communities. Should the
Corporation sell off high-value properties, it is not likely to be in a position to re-
enter the more expensive areas, especially in Auckland, further concentrating its
presence in areas with a high proportion of state housing.
214 Sales are progressing as opportunities arise, subject to the following checks being
• site assessment for re-letting to redevelopment, through to divestment
• property offered to iwi where a first right of refusal exists
• for properties valued at $1 million or more, the Corporation is also required to
follow the sensitive land process defined by Land Information New Zealand
• The Corporation is required to formally notify the Minister of Housing of its
intention to dispose of “sensitive” land, or land valued at $1 million or over in
accordance with the process agreed by Cabinet.
215 Gang occupation of Corporation property is one of the most widely and
misreported issues in the news. The Corporation does not tolerate tenants
committing criminal acts on its properties, and seeks to evict tenants when
evidence of criminal activity is obtained from the police. Eviction is a last resort.
216 However, the Corporation does not have powers to respond to criminal incidents
directly and criminal and nuisance behaviour must be reported to the police.
Police evidence leads to the start of eviction proceedings, which is a legal process
that all landlords, public and private, must go through when acting upon an order of
217 Housing New Zealand cannot and does not discriminate against tenants on the
grounds that they have gang affiliations, and notes that some gang members are
good tenants who pay their rent and look after their homes.
218 There has recently been a review of Housing New Zealand’s investigation
processes, which found the Corporation has had difficulty meeting a significant
increase in the number of referrals for investigation, resulting in delays in
219 The Corporation has developed a series of initiatives that will improve this
• introducing an improved framework to help the Investigations Unit screen
incoming referrals. Those referrals requiring investigation will remain with the
unit, and those lacking documentation or evidence will either be closed or
returned to the managers of each housing region for monitoring
• completing a review of referrals, which has already identified 795 referrals that
can be dealt with by other means first, or safely closed. By taking this
approach, the Corporation can more effectively target the investigations work
it does, improve the use of its resources, and deliver speedier outcomes for
220 Suspicions of fraud among state house tenants account for less than one percent
of all tenants, but when it does occur, the Corporation strives to deal with it
efficiently, thereby protecting the reputation of the vast majority of honest tenants
and the Corporation’s reputation as a Government agency.
221 The Corporation has responsibilities both to its tenants and to itself under the
Residential Tenancies Act, and there is strict protocol to follow when damages
occur to a property. Damage can consist of tenant damage (amounts charged to a
tenant for damage caused), third party damage (amounts charged to a third party
for damaged caused), and miscellaneous damage (generally through an act of
nature, such as a storm). Seventy-seven percent of damage debt is under a
222 The Corporation’s policy is to inspect all its properties at least twice annually,
although most are often inspected more frequently through routine visits by
tenancy managers. If damage is deliberately caused by the tenant, then the
Corporation will pursue the repair of the damage and payment for the repair with
the tenant. The Corporation will not charge damage to tenants if the Tenancy
Tribunal does not accept it, if it is uneconomic to do so, if improvements to the
property outweigh the damage, or if the damage occurred as a result of a medical
223 As of 31 October 2007, tenant debt was $4.145 million. Unlike commercial
landlords, the Corporation has social obligations and therefore debt management
processes focus on considering individual tenant circumstances, minimising the re-
occurrence of the problem, and where possible, avoiding using legal means to
224 Debt collection processes include:
• personal contact by phone or home visit as soon as practically possible after
rent payments are missed, with the objective of negotiating an arrangement to
repay any missed payments
• staff working closely with tenants and other social support agencies to keep
tenants in their homes, while repaying any money owed within a reasonable
period of time based on what debtors can afford
• developing arrangements which encourage sustainable housing and consider
the circumstances of families
• involving Tenancy Services for independent mediation or resolution if no other
arrangement can be made or agreed upon.
225 Key strategies have been developed to improve debt management practices,
• a review and amendment of quality management procedures to reflect best
• staff training in debt management, negotiation and conflict resolution skills,
with a focus on early intervention
• introducing specialised roles in the past six months to provide a dedicated
focus on debt management in historically problematic regions.
Protocols and agreements with the Department of Corrections
226 The Corporation works closely with the Department of Corrections to provide
housing for offenders. Here, the Corporation has a responsibility and a regard to
the wider community and must therefore consider the potential risk of an offender
at a particular property. This is a particularly sensitive subject especially
concerning to child sex offenders.
Properties affected by Leaky Building Syndrome
227 The Corporation commissioned a report with Cove Kinloch Consulting Ltd to
visually survey 6,530 housing units that met the build date or construction type
criteria commonly associated with leaky building syndrome. From this survey, 22
buildings containing 140 rental units were moisture tested, with the
recommendation that 21 of the buildings be partially or fully re-clad. The
Corporation expected that some of its 67,000 rental units would be affected, and
140 is a small number because Housing New Zealand was involved in a relatively
small amount of new development during the leaky building era.
228 The report estimates repairs will cost approximately $12 million, excluding
professional fees. The Corporation is exploring cost compensation, as well as
investigating repair options. Construction of work is expected to commence in the
second half of 2007/2008, and completed within three years.
229 Testing showed no evidence of any immediate health or safety risks to residents at
these properties, who have been kept informed of proceedings. The Corporation
will continue to work closely with health professionals on a case-by-case basis to
manage any possible health risks for tenants or contractors during the repair
Consultant and contractor costs
230 In the last financial year the Corporation paid a total of $12.6 million on contractors
and consultants. This was an increase of over $1.6 million from the previous year,
which raised questions in the media. The increase in consultant and contractor
costs is in response to the growing volume of work and the increased breadth of
operational programmes and special projects the Corporation is involved in. For
example, through its redevelopment and new build programmes in 2005/2006, the
Corporation built an additional 523 units. The new redevelopment programme
meant more specialist services such as architects, valuers, surveyors and
redevelopment specialists were needed.
231 Consultant and contractor costs for 2004/2005 were 1.1 percent of the
Corporation’s actual operating budget.
232 The Corporation is currently undertaking a procurement review which aims to:
• provide a procurement stocktake
• research leading practice procurement models most relevant to the
• identify an optimal procurement delivery model and strategy
• identify areas for future cost savings.
Legislative and financial accounting framework
233 The Housing Corporation Act 1974, as amended in 2001, requires the Corporation
to meet its social objectives in a businesslike manner, with good financial oversight
and stewardship. Investment decisions relating to the total portfolio must maintain
or improve the Corporation’s financial performance.
234 The Corporation maintains accounting policies (International Financial Reporting
Standards implemented 1 July 2007) that meet relevant legislative requirements6
and generally accepted accounting standards set by the Institute of Chartered
Accountants of New Zealand. Under these standards, all fixed assets are initially
recorded at cost, and freehold land and rental properties are re-valued annually.
6 The Crown Entities Act 2004 outlines the financial reporting required by the Corporation.
Financial distribution to the Crown
235 The Housing Corporation Act 1974, section 40(1), requires the Corporation to pay
its surplus7 for each financial year to the Crown, unless the responsible Ministers
authorise it to keep all or any part of the surplus. The Corporation is in discussion
with Treasury and the Department of Building and Housing over the impacts of the
International Financial Reporting Standards (IFRS) on the difference between the
net surplus/loss shown in the Statement of Financial Performance and the
dividends to be paid in the future.
236 Total operating revenues for the Corporation for the year ending 30 June 2007
were $816 million, of which $781 million came from rental income. Operating
expenses consumed about 92 percent of total operating revenues at $749 million.
Tax was $54 million leaving a surplus of $13 million. From 2007/2008, the
accounts will be prepared under IFRS which provides for the recognition of
deferred tax. Therefore, the net surplus as reported in the Statement of Intent is
much higher but a significant portion of that is deferred tax.
237 Table 17 overleaf summarises the Corporation’s forecast financial performance for
the next three years.
7 Under s.40 (2) surplus is defined as “surplus capital and any operating net surplus after any provision
responsible Ministers have agreed is necessary for the efficient and effective conduct of the Corporation’s
Housing New Zealand Corporation financial summary for the period 1 July
2007 to 30 June 20108
Rental income - tenants
Rental income - Income-Related Rent subsidy
Crown appropriation income
Total operating revenue
Maintenance/cost of ownership
Rental property depreciation
Management assets depreciation
Third party rental leases
Other direct costs
Employee remuneration and benefits
Operating surplus before tax
Income tax expense
Net surplus after tax
238 The table above shows continuing increases in the Corporation’s revenues and the
impact of inflation at an estimate of three percent. The impact of increased
depreciation due to the annual revaluation is not reflected in the above figures.
239 The estimated impact of depreciation and deferred tax, as noted in the Statement
of Intent, is reflected in Table 18, overleaf. Future revaluation (from 30 June 2008
onwards) has not been factored in at this stage given the uncertainty as to what
the increase may be.
8 The figures are as published in the 2007/08 Statement of Intent, and have not been adjusted for the
ongoing impact of the 30 June 2007 property revaluation.
Housing New Zealand Corporation Adjustments to Net Surplus after Tax
Net surplus after tax
Depreciation as a result of 30 June 2007
revaluation (estimated) Adjusted Net Surplus
240 The Corporation manages a valuable housing asset and other assets worth $14.8
billion (as at 30 June 2007). The equity of the Housing New Zealand Corporation
Group is $13.1 billion as at 30 June 2007, and debt is $1.8 billion. The balance
sheet is strong in commercial terms due to a high ratio of total equity to debt, and
is likely to continue to become stronger as state housing is re-valued annually,
further increasing total equity. From 1July 2007, the Corporation will be reporting
on an IFRS basis and the closing Balance Sheet has been restated and included
in the following table. The major impact is the deferred tax. The financial position
is outlined overleaf in Table 19.
Housing New Zealand Corporation Consolidated Statement of Financial
30 June 2007
1 July 2007
Asset and fair value revaluation reserves
TOTAL SHAREHOLDER FUNDS
NET WORKING CAPITAL
Mortgage advances (net of provisions)
Rental properties (includes WIP)
LONG TERM ASSETS
Lease, Mortgage Insurance Scheme and
Mortgage sale provisions
Borrowing – Crown
Sick Leave Provision
LONG TERM LIABILITIES
241 The annual revaluation and changes to housing stock levels have increased the
value of the property portfolio from $13.3 billion at 30 June 2006 to $14.8 billion at
30 June 2007.
242 The Corporation generates free cash flows of about $160 million a year (mainly
from depreciation, asset sales and asset write-offs). These free cash flows are
used to fund future capital expenditure, such as acquisitions, modernisation, and
infrastructure, with top-ups provided by way of additional Crown appropriation.
Government expenditure on housing assistance
243 In 2006/2007, Vote Housing was $215.278 million capital and $24.063 million
operating (including GST). Assistance with accommodation costs for state house
tenants and other low-income households comes from Vote Social Development,
• the Accommodation Supplement (AS), a cash benefit to help with housing
costs. As at 30 June 2007, there were 242,500 recipients. The 2006/2007
annual cost was $750 million (an average weekly AS of $57 per recipient).
The Corporation’s role is to monitor and report to the Minister on the take-up
of the AS, and on other AS policy issues
• the Income-Related Rent subsidy, which subsidises rents for low-income state
housing tenants. These tenants pay an Income-Related Rent equal to 25
percent of their income. In 2006/2007, Income-Related Rents cost $436
million, assisting 59,479 households at an average annual cost of $7,330 per
244 The Corporation also received $781 million in rental income, which includes the
Income-Related Rent subsidy detailed above.
245 Possible financial risks include:
• depreciation funding
• maintenance funding
• capital funding – acquisitions
• capital/operating funding – lending products
• international financial reporting standards
• stock modernisation/obsolescence
• mortgage guarantees.
246 There is a risk of the rate of increase in depreciation being higher than the rate of
increase in market rents, as a result of the revaluations. The rents are used as the
funding source for this cost. Last year, the increase in the revaluation was mainly
in relation to the land value rather than the improvements, therefore, the uplift in
depreciation was not as much as forecast. Figure 3 overleaf outlines the changes
between 2002/2003 and 2006/2007.
Rent and depreciation increases
247 The maintenance forecast for the future is shown in Figure 4, below, but there is a
risk that the Corporation will not be able to fund to this level, therefore impacting
upon the ability to maintain the current level for the property benchmark condition.
Maintenance expenditure forecast ($ millions)
Anticipated Gross Funding
248 To achieve demand targets, the acquisition programme has increased the volume
of leased properties it sources (as these properties are obtained at no capital
outlay). At 30 June 2007, the Corporation had 2,783 leased properties; and this
number is expected to grow by 973 properties (net) over the next three years,
equating to about five percent of the state housing available.
249 While these leased properties come at no capital outlay, the Corporation carries
operating financial risks in that it guarantees a minimum rent, pays the rent even if
the property is vacant and covers the cost of damage. At times, the margin
charged to investors and landlords may not cover these costs.
250 Last year, the Corporation incurred costs of approximately $40.1 million for third
party leases which slightly exceeded the budget of $39.9 million. In 2007/2008,
this cost is expected to be $43.6 million.
251 There is a risk that the local council rates (general and water) may continue to
increase at a higher rate than the rate of increase in rent revenue. Recently, the
increase in rates has been greater than the Cost Price Index increase as shown in
Figure 5 below. The costs of rates in 2006/2007 was $91.6 million. Act
Growth of rent and rates
Capital Funding - Acquisitions
252 The current level of Crown capital funding for the purchase and building of
additional houses decreases from $66.9 million in 2007/2008, to $58.5 million in
2008/2009, to $5.8 million in 2009/2010 and outyears. There is a risk that
additional levels of funding from the Crown that may be agreed might not be
sufficient to meet the level of demand (given the economic forecast) and that the
expectation of “waiting time” and prioritisation will need to be managed.
253 The number of houses that can be acquired could be reduced by price inflation
and/or inability to source leased properties from the market (especially if returns
Number of Properties
Cost (net of Sales) $ million
Crown Funding $ million
Corporation Funding required to meet
plan $ million
Capital and Operating Funding - Lending products
254 The current level of Crown capital and operating funding for the loan products
(Home Ownership Education, Rural Housing, local government and third sector
housing) decreases as shown in Table 21 below. Public expectations will need to
be managed given the lower pool of funding available.
Third sector and local
Low Deposit Rural Lending
Housing Innovation Fund
Non Dept Output Expense
HIF Benefit & Unrequited
Welcome Home Loan
Capital and Operating Funding - time limited funding
255 The following table details capital and operating programmes that have time limited
funding associated. The table below details when funding will expire.
Programmes with time limited funding
Rural Housing Programme & evaluation
Rural Housing Programme & evaluation
Financial Assistance to Owners of Non Weathertight Homes
Wellington City Council
Third Sector & Local Government & Housing Innovation capacity
Benefits & Unrequited Expenses
Essential Repair and Infrastructure Suspensory Loans Roll out
Special Housing Action Zones
Auckland City Council Properties Reconfiguration Programme
Financial Assistance to Owners of Non Weathertight Homes
State House - Acquisitions
Third Sector & Local Government
Papakainga (Low Deposit Rural Lending)
International Financial Reporting Standards (IFRS)
256 There is an impact on the dividend due to the implementation of IFRS. The
dividend payable is currently based on net profit after tax (NPAT). The Minister
can approve retaining a dividend. Due to IFRS, there are a number of non-cash
impacts on the level of NPAT (particularly deferred tax and fair value adjustments).
These increase the level of reported NPAT, but there is no corresponding cash
available to fund this. The issue of the dividend payable is currently subject to
discussions with Treasury.
Stock modernisation and obsolescence
257 The Asset Management Strategy identifies a proposed modernisation programme
to incorporate the modernisation of approximately 43,000 units built before 1980.
The properties selected are those properties that meet the property profile for
modernisation. The selection included an age profiling and excluded units already
accommodated in other programmes, already modernised and those that are
targeted for disposal.
258 The energy efficiency objective adopted by this strategy is to ensure all houses
built before 1978 have been retro-fitted with a suite of cost-effective energy
measures within 15 years.
Modernisation requirements (over 15 years)
Cost per annum
Total modernisation requirement
Improving health and safety related amenities
Improving efficiency-related amenities
259 There is currently $7 million per annum allocated until 2009/2010 of Crown capital
funding for the Healthy Housing programme.
Funding announced but not in baseline
260 There are currently three major areas where there has been a government
announcement regarding the construction of buildings or the implementation of
funding products, but the money is not in the baseline for the Corporation at
present. These include the construction of housing by the Housing Agency
(including infrastructure costs for Hobsonville), the funding for the Wellington City
Council for social housing and the shared equity scheme. Expectations will have
to be managed to ensure the timing of communications relates to the funding
availability (Note: housing construction cost for Hobsonville, apart from state house
purchase, is carried by the development partner).
9 The design fee assumes a whole of house approach where all amenities are provided at once. The design
fees reflect the drawing up of plans and specifications showing the integration of all amenities into the
261 The Corporation faces financial risks associated with some of its lending products
(for example, the Welcome Home Loan) should borrowers be unable to meet their
repayment obligations. While market conditions have been most favourable over
the past (stable employment, growth in property values), experience would indicate
that economic cycles do have their ups and downs. In worsening economic
conditions, the Corporation may have to make significant increase to the provision
for the guarantees it has made. This would impact on forecast net profits for that
Housing New Zealand Corporation Regional snapshots
Snapshots of regional position
High demand for state houses in proportion
to available stock
Lowest incomes in New Zealand, while
rents and house prices at higher end
Substandard rural housing
Māori land issues.
West and North Auckland
High rents and house prices, and long
waiting list (largest in country)
Ageing state housing and the growing need
for funds for maintenance and upgrades.
10 N.B.: The list of issues is not exhaustive, but gives examples of important issues
Snapshots of regional position
Bay of Plenty
Increasing property and rental prices in
cities while wages remain relatively low
Relatively scarce land in Tauranga making
it difficult to develop affordable housing
Rural substandard housing in areas other
than those already part of RHP.
Affordability a problem
Overcrowding issues, unable to keep up
with demands for bigger homes
Major issues with substandard housing in
Coromandel area and back blocks of
Kawhia/Raglan and Ngaruawahia.
The local housing markets throughout the
region vary greatly. For example, Taranaki
is experiencing an increase in demand
while demand in Palmerston North is
cyclical in nature, due to the high student
population residing in the city
Problems for low-income single people
(including single-headed household)
accessing affordable housing
Lack of knowledge regarding the nature
and extent of housing need in rural areas.
East Coast/Hawkes Bay
Mismatch between current supply and
demand, and concern regarding the level of
overcrowding in state housing
Evidence of substandard housing in rural
parts of the region, currently being
addressed by RHP but extends beyond
Snapshots of regional position
Growth in house prices has impacted on
affordability and therefore on demand for
Wellington Hutt Valley
There is high demand in Wellington central
and immediate suburbs and certain parts of
Pockets of severe deprivation in which
there are concentrations of state housing
The region has older state houses (average
of 44 years compared to 38 years
Need for seasonal worker accommodation.
Housing affordability issues in the
Queenstown Lakes District
Low demand for state housing in Dunedin
and Invercargill, with higher demand in the
West Coast and Timaru areas
Anecdotal reports of substandard housing,
particularly on the West Coast.