Housing Minister Chris Bishop details how the Government will make it easier for community housing providers to get finance to build more social houses

Housing Minister Chris Bishop considers getting the Government to lend directly to community housing providers. Photo / Mark Mitchell

The Government has unveiled how it’s going to make it easier for community housing providers (CHPs) to get the money required to do more of the heavy lifting providing social houses.

Minister of Housing Chris Bishop wants to “level the playing field” between the state provider of social houses - Kāinga Ora Homes and Communities - and those in the private sector that rent houses to low-income tenants.

He recognises Kāinga Ora, with the backing of the Crown, can borrow at much lower interest rates than the charities and other investors that provide state housing.

So rather than continue relying heavily on Kāinga Ora to build social houses, which a Labour government would be more inclined to do, he wants to make it cheaper and easier for CHPs to secure the finance required to do more themselves.

“The last government was obsessed with state housing,” Bishop said.

“I don’t care who builds social and affordable houses, as long as they get built.”

The Government has committed to bolstering CHPs in a few different ways.

Firstly, it is tweaking the way it engages with CHPs to remove some of the risk their financiers will weigh up when considering whether to lend to them.

Secondly, the Government will try to get the Reserve Bank to change the amount of capital it requires banks to hold in relation to the money they lend to CHPs. If the Reserve Bank enables banks to treat CHPs as lower risk, CHPs should find it easier to secure lower cost loans.

Thirdly, the Government is looking at getting directly involved in helping CHPs by lending to them or providing their financiers with guarantees.

“Kāinga Ora can borrow at a small margin above the Crown’s cost of financing, while CHPs effectively get access to finance only at commercial rates," Bishop said.

“CHPs having access to finance that is not unnecessarily restrictive will give them a stronger economic case for building more social houses, and makes progress toward CHPs and Kāinga Ora working on a level playing field to deliver social housing...

“The truth is we won’t solve our housing crisis through the government alone.”

CHPs currently operate around 13,700 social homes across New Zealand.

There are around 21,000 people on the social housing waitlist.

More soon…

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.