Government tweaks 'key tool' for housing vulnerable New Zealanders sparking fears for homeless

The Government's decision to tweak a "key tool" for housing vulnerable Kiwis is sparking fears it could force hundreds of families to remain homeless. 

The tool, known as 'redirect housing contracts', involves Community Housing Providers (CHPs) helping to fund the lease of private properties through multi-year contracts, for vulnerable New Zealanders.

The CHP arranges the lease with a property owner to house a family, who contribute 25 percent of their income to paying the rent, with the Government paying the rest. It's helped curb the homelessness crisis, one CHP says. 

"Redirects have been a crucial tool for organisations like Monte Cecilia to minimise the homelessness crisis' impact on top of COVID-19's implications on New Zealand's economically vulnerable families," says Monte Cecilia CEO Bernie Smith.

"We have been finding housing this way at a rate of three a week for several years and had managed to place over 200 additional families into transitional housing."

But the Government is tweaking the tool so that money goes towards new-builds instead of buy-ins. From October 1, no new redirects from the private market by CHPs will be approved, with some exceptions, because it doesn't add to overall housing supply. 

Existing redirects will be able to be relisted when they become vacant and existing leases will be able to be renewed. The change in practice only applies to new redirects.

When the Public Housing Plan 2021-2024 was launched in January this year, Housing Minister Megan Woods set an expectation that CHPs should also be focussing on additionality in housing. 

There has been a strong tendency for CHPs to rely on buy-ins rather than new-builds, and this is something Woods has been seeking to change, because around 80 percent of them have been buy-ins in recent years. 

Housing Minister Megan Woods.
Housing Minister Megan Woods. Photo credit: Getty

Though, the number of CHP buy-ins has been dropping, with more new-builds coming on board. In the 2020-2021 year to February, 385 were new-builds compared to 786 redirects, while in 2019-2020 it was 375 new-builds versus 972 redirects. 

Woods acknowledges that CHPs are delivering housing places more than ever. Between July 2020 and June 2022, CHPs are expected to bring on 1283 places - all approved or contracted - and approximately a third of these have already been delivered.

Between July 2022 and June 2024, a further 138 new-build places through CHPs have been approved or contracted.

Funding to CHPs has increased from $95 million in 2016-2017 to $339 million in 2019-2020.  

But Smith says now is not the time to make changes to a tool that works. 

He says the change is expected to force over 200 families - totalling over 1000 people, 700 of whom are children currently in Monte Cecilia accommodation - to wait years in temporary housing for the Kāinga Ora build programme to catch up.

"When Labour came to power there were just over 67,000 state houses and a waitlist of 5000. Five years later, the state house numbers have grown by less than a 1000 while the public housing waitlist has soared to 24,000. 

"The decision to throw tools out of the toolbox at this time of crisis is utterly baffling, and what's doubly confusing is the Government's own 2021-2024 housing plan acknowledges the role of CHPs and states they are committed to ongoing investment in the sector."

The Government plans to build an additional 8000 state and transitional homes, bringing the total to 18,000 by 2024. But even with 18,000 state and transitional houses, that would still leave thousands of people needing somewhere to live, going by the current waiting list.

House prices across New Zealand are continuing to rise, with the latest Real Estate Institute data showing a 28.7 percent annual increase, from $637,000 in June 2020 to $820,000 in June 2021. 

But consents are also on the rise. Estimates from Stats NZ earlier this month show the number of new homes consented in the year to May was at an all-time high of 43,466 - an annual increase of 17 percent. 

The data showed 1380 townhouses, flats and units were consented in May alone, the highest number since records began in 1990.

The Government in March announced a string of policies to try and help Kiwis get into homes, from tax changes to deposit assistance eligibility tweaks.