Housing NZ wants to redevelop state housing stock and build smaller homes in Central, West and South Auckland, and Christchurch

By Lynn Grieveson

Demand for smaller properties in central and west Auckland would be a major driver of a shift of state housing stock from regional cities, Housing New Zealand chief executive Glen Sowry told parliament's Social Services Select Committee.

Sowry said HNZ was seeing "significant growth and demand in Auckland and to some extent in Christchurch presently, in some of the regional areas we are seeing a significant reduction in demand."

Finance Minister Bill English signalled last week as much as a third of Housing NZ's NZ$17 billion housing estate would have to be restructured into better locations with better housing quality.

Sowry said in Auckland around 67% of those on the waiting list were people requiring one or two bedroom properties.

"Clearly we have the bulk of our properties as three bedroom. We need to reconfigure our portfolio. In South Auckland we need more properties that are larger so that's something that we do understand and are actively working to redress. The demand for future housing we believe is Central and West Auckland, and also in South Auckland. That is where we are seeing the strongest demand and that is where we are making a lot of our investment."

Sowry said the total demand for state housing nationally would remain broadly in line with current levels over the next ten years, but the demand would contnue to shift to Auckland and Christchurch.

"So what we are going to see is a similar number in total, but a shift from some of the low demand regional areas into the high demand metro areas."

'Boarded up state houses'

Labour's housing spokesman Phil Twyford disagreed, saying the demand for housing was still acute in regional areas. He said tightened criteria to qualify for a Housing NZ home meant fewer people were now eligible to even get on the waiting list, allowing the government to claim that state housing was not needed in those areas.

"Almost every provincial city in New Zealand has dozens of boarded up state houses, you've got people who are living below the poverty line one street away living in sub-standard and over-crowded private rental accomodation, " Twyford said.

"I was in Palmerston North, Wanganui, Napier looking at them last week. There are people with children living in what most people would describe as poverty who aren't eligible and can't even get on the waiting list because the criteria is so tight. We are in the worst housing shortage in the generation. They should build more state housing".

Healthy Homes Bill on "knife edge"

Twyford went on to label the government's new "Warrant of Fitness" for Housing NZ homes a "PR stunt" after Sowry told the select committee that he believed 96% of the housing stock would pass the WOF.

He said he was confident in his assessment because HNZ already had a property quality index that looked at each property "in more depth than the WOF proposals."

Twyford's own private member's bill, the Healthy Homes Guarantee Bill which calls for minimum standards for insulation and efficient heating for all rental properties including the private sector, gets its first reading next week.

He said United Future MP Peter Dunne was likely to have the casting vote, and described the bill as "right on a knife edge".

Damage costs an ongoing challenge

Housing New Zealand hoped to improve on its target turnaround time between tenancies of 45 days, but the condition homes were often left in by tenants made this a challenge, chief executive Glen Sowry told the Social Services Select Committee.

"Probably the number one operational focus in our business at the moment is reducing those turn times .. often people who own rental property say to me 'surely you can do better than that' and we are trying to. The difference is ... often the condition that the property is left in after one of our tenants leave is quite different from what a private landlord would accept and it is one of the challenges and the costs of being a social landlord".

Sowry defended the call by Housing Minister Nick Smith for a firmer approach to property damage by tenants, saying it was a continuing problem and an area they will be focusing on. "The repair bill remains in the tens of millions of dollars and it is something that we are continuing to focus on. We have made very good progress in reducing rental debt in the last 12 months but damage remains a significant challenge for us.

"I visited a property at Titahi Bay, which two weeks prior had been in perfect condition. When I went through it there had been over NZ$30,000 of damage."

He said tenancy managers would be asked to be "more active" in working with tenants to avoid damage, as it was very difficult to recover costs from tenants especially if they had moved on.

Housing NZ to contribute to coffers

Despite the ongoing costs of damage and the 653 Housing NZ properties assessed as earthquake prone, Sowry said he was confident it would be able to continue operating and paying dividends to the government.

In response to questioning from Twyford (who said after the accomodation supplement was excluded, capital contributions and dividends projected over the next 3 years meant the government was receiving NZ$252 million from HNZ), Sowry said they could continue to invest in new stock and provide management tenancy, while still paying the dividend.

"If we felt that we were unable to continue to invest in our business for the future, clearly we would have a discussion with the shareholder about that, but we do not believe that is the case."