Whanganui District Council could secure massive external investment for pensioner housing portfolio

Pensioner housing on Walter Nash Place in Gonville. Photo / Bevan Conley

Upgrading Whanganui District Council’s pensioner housing portfolio could fall on ratepayers but external investment is also being considered.

The council needs to add up to 195 more units by 2050 to keep up with projected demand.

The portfolio is currently valued at $40 million.

Council property and open spaces general manager Sarah O’Hagan told a long-term plan (LTP) workshop that the cost of running the portfolio was budgeted at approximately $2.4m, with $2m collected in rent.

“It doesn’t wash its own face and hasn’t done for a wee while,” she said.

The complexes were also “diminishing at an uncomfortable rate”.

Council chief executive David Langford and chief financial officer Mike Fermor had already been in conversation with potential funders, O’Hagan said.

“Housing portfolios like this are attractive to Super funding companies.

“Those companies would be very interested on the basis of a $150m-plus investment.

“If we wanted to replace our current market share, we would be pushing that kind of number.”

O’Hagan said that, if that approach was taken, a “very accelerated” work programme could take place, with little impact on ratepayers.

“We will need some support to do that and some funding, and we’ll come back with what those opportunities are and what the different vehicles for doing that are.”

Council chief executive David Langford. Photo / Bevan Conley.

That funding would be included in the LTP.

Deputy Mayor Helen Craig said any company that invested would be doing it for profit, not charity.

“To do that, the rent levels are going to need to be at a level where they can achieve that.

“Why are we currently running our own existing portfolio at a loss? Why aren’t we, at the very least, charging a rent that covers the cost of running it?”

O’Hagan said the portfolio was essentially a social housing network.

Residents in a community housing provider unit are eligible for income-related rent subsidies from the Ministry of Social Development (MSD), while those living in a council-owned unit are not.

Langford said getting an external investor wasn’t a new idea. “There are other housing trusts that have been set up across the country, in partnership between pension companies and councils, to run social housing portfolios.

“It can be done. The case studies are out there and it can be done in a way that keeps rents affordable for people we are looking to look after – our elderly community.”

With all the other work the council needed to do, $150m probably wouldn’t fit on its balance sheet, Langford said.

Councillor Josh Chandulal-Mackay said he would like to see how MSD subsidies would affect what tenants would pay, along with what the long-term rent increases would be for the investors to get a sufficient rate of return.

“What I wouldn’t like to see is us essentially corporatise our social housing portfolio at the expense of affordability for the people who need it.”

Langford said officers would do their due diligence but it looked like there was a way to get a funding partner without surrendering council control or affordability.

He said a partner was a viable option and it wouldn’t involve the council “slowly tinkering” with the portfolio.

The council’s previous LTP budgeted about $4m for housing, which didn’t go a long way.

“You need to be talking about a substantial investment if you want to make an impact on the housing challenges the city has at the moment,” Langford said

Mike Tweed is an assistant news director and multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily the Whanganui District Council.