An advisory group in 2010 said taxpayers could not afford to throw more money into state housing, so it recommended leveraging public funds by fostering community groups that could bring in other philanthropic funding and borrow, and at the same time provide the necessary hand-up support for tenants.
From April 14, community housing groups will get the same subsidies as Housing NZ for new low-income tenants. Anyone needing housing assistance will have to go to Work and Income instead of Housing NZ.
The story so far
Ironically, Housing NZ's first step in preparing for these changes was to axe social support for its own tenants. From August 2011, its staff were told to "stop delivering social services that should be delivered by other organisations".
In April 2012, the corporation closed its doors to anyone without an appointment.
These changes have been partially reversed. New chief executive Glen Sowry, a former Round the World yachtsman, quietly reopened the offices for walk-ins a month after he took office a year ago.
"I believe that where someone has language difficulties, or for whatever reason can't contact us by phone, I felt it important that they had the ability to be able to come up to the front door of our local office," he says.
Staff numbers, which dropped from 1142 in June 2010 to 987 in June 2012, crept back up to 1043 by last June. Tenancy managers have been told to look out for social needs and develop "very close relationships" with local agencies such as budgeters and women's refuges.
MSD takes over
From April 14, the Ministry of Social Development (MSD) will take over all applications for social housing, allocate qualifying tenants to Housing NZ or community providers, determine income-related rent subsidies and investigate whether tenants remain entitled to social housing in both state and community sectors.
Housing NZ will lose a net 77 staff. Forty will move to MSD and the corporation has budgeted for $795,000 in redundancy pay for the others.
Surprisingly, the change will increase the number of bureaucrats because MSD is creating 168.6 new jobs, including 64 call-centre jobs and 37 technical jobs to calculate income-related rents in a new Auckland unit.
The ministry says all frontline staff at Work and Income, Seniors and StudyLink will screen people for housing needs when they come in for benefits or other help. People will also be able to apply for housing help through the call centre or any MSD office.
How it will work
Housing Minister Nick Smith says he will issue a direction to MSD on April 14 on how to decide who is eligible for social housing.
He says criteria will be broadly similar to Housing NZ's five tests: the affordability, adequacy and suitability of applicants' existing housing; accessibility, including discrimination issues and the cost of bonds and furniture; and sustainability, taking account of the applicant's social and financial competence.
Points will still be awarded on each criteria and those eligible will go on a waiting list. MSD will then ask Housing NZ and any other local housing providers whether they can house each person.
Dr Smith says applicants' preferences for house and landlord will be considered along with other factors such as matching size, cost, parents' work and children's schools. Providers will also have a choice about which tenants they accept.
Tenancy reviews
In principle, all social tenancies from April 14 will be reviewable. But the Cabinet has not yet decided how often MSD will review tenancies, or whether to exempt any groups such as the elderly and disabled.
Last year Dr Smith forecast that 1000 state tenants would be moved out in 2015-16, and 2000 in the following year. He says those estimates were based on the 4006 Housing NZ tenants (6.2 per cent) who already pay market rents because their incomes are too high to qualify for income-related rents.
The new system will give state tenants on market rents a financial incentive to get out voluntarily. They will be eligible for MSD's accommodation supplement if they move into either private or community housing.
A further 15.6 per cent of state tenants are working but still on incomes low enough to qualify for partial rent subsidies.
They might be worse off if forced into the private sector, even with the accommodation supplement, and Dr Smith gives them some reassurance.
"The robust needs assessment that is part of the tenancy review process will identify, among other things, whether tenants are able to access and afford alternative housing," he says.
"If they are not able to do so, ministers do not expect that they will be moved on."
State house sales
Experts believe community housing providers might be able to build about 100 new homes in the next year that would qualify for income-related rental subsidies. But ministers want to lift community housing from 6 per cent of all social housing to 20 per cent within five years, partly by transferring some state houses directly to community providers.
Dr Smith says this will start within months. Housing NZ is already talking to "specialist providers" in major cities such as IHC's subsidiary Accessible Properties.
"In smaller provincial towns in New Zealand, it's more likely to be a community-based iwi [tribe] or other provider."
He says transfers will be modelled on experience in Australia, where states have taken different paths.
"Some have chosen sale, some have chosen discounted sale, some have chosen leasing a portfolio, some have chosen management contracts," he says.
The price of any sales is a major barrier. Community Housing Aotearoa argues for sales at a "restricted cash flow" valuation based on future rental income, including the income-related rent subsidy.
But that would value state houses at much less than their $16.4 billion in Housing NZ accounts, which is based on market valuations.
Writing down the valuation in one hit would be a big negative for the whole state balance sheet.
Community Housing Aotearoa has suggested writing down blocks of houses gradually at $100 million a year, starting with those targeted for sale. "Those," Dr Smith says, "are very real issues that the Government is working its way through."
Tight-knit families fear being forced from their street
The Laveaina and Sefo families of New Lynn need new houses - but they don't want to be moved out of the quiet, friendly cul-de-sac they have lived in for much of their lives.
Mafa Laveaina, a 40-year-old mechanic now on a benefit after suffering a stroke, has lived at 3 Thom St for 12 years.
His wife, Hine, grew up a few doors down the street.
Their three children, Henry, 15, Junior, 14, and Melina, 13, have grown up in the family's two-bedroom Housing NZ duplex.
Two months ago Mafa's brother Fenika Sefo, who has a seasonal job in a mussel factory in Henderson, also moved in with his wife, Vai, and three children aged 8, 5 and 1. They had been living with the brothers' sister, but their landlord sold their house and they could not afford a private rental.
Another brother and his family live across the road. The Laveaina and Sefo families have both applied for other Housing NZ homes and are on the waiting list.
Everyone in the street's 16 houses knows everyone else.
"Kids play in the street and neighbours all get along," says Roderick Holland, a sickness beneficiary at number 9. Sometimes he buys pizzas for his neighbours and they responded at Christmas.
But Housing NZ is considering demolishing the 16 houses to make room for a mixed-ownership development of 130 to 180 homes. Hine Laveaina agrees that more houses are needed, but says both families want to stay in the area.
No more 'house for life'
* All state tenancies will be reviewed regularly from April 14, ending the policy of providing a state-owned "house for life''.
* People's needs for any "social housing'' - state- or community-owned - will be assessed regularly by the Ministry of Social Development.
* Tenants will pay only 25 per cent of their incomes in rent in both community and state housing.
* Community housing providers will get the same subsidy as Housing NZ to cover the gap between income-related rents and market rents for new tenants.
nzherald.co.nz
To read the first part of this series, visit tinyurl.com/housingnz2014.
