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Social housing providers

Written By: - Date published: 9:08 am, November 12th, 2014 - 46 comments
Categories: business, capitalism, class war, housing, Privatisation - Tags: , , ,

Key is trying to frame flogging off much of the state housing asset as a move to “social housing”. When he does so, he likes to use the Salvation Army as an example of a possible provider:

State house could be sold to community housing groups – Key

Prime Minister John Key says state houses could be offered to community housing groups at a discount price as part of Government’s plan to sell off part of its housing stock.

Mr Key said providers such as the Salvation Army might not have the money to provide more houses for needy tenants.

To help them increase their housing stock, the Government could sell them some of its 69,000 state houses at a cut price, he told TVNZ’s Breakfast this morning.

Asked about the cost to the public of selling houses for less than their value, Mr Key said taxpayers would be “better off over all”.

Questions. (1) How exactly will we the taxpayer be “better off over all” for flogging state assets at cut prices? (2) Will the cut price offer apply to other providers – why or why not?

The second question is especially pertinent because your typical social housing provider is more likely to be a liquor company than the Sallies. “A liquor company???” I hear you cry? Why yes:

Liquor firm eyes more state houses

A liquor company that bought about 500 state houses under the last National Government wants to buy a further 1500 now that state houses are up for sale again.

Masterton-based Trust House bought all 541 state houses in the Wairarapa and Tararua districts, keeping on their tenants, for $10.5 million in a 1999 deal that current chief executive Allan Pollard describes as a discount of “probably 50 per cent” off market value.

He says the company now wants to buy 1500 more state houses “anywhere in the lower North Island”. It is looking “from New Plymouth and Hastings down to Wellington”.

So if history is a guide then the answer to the second question is yes, flog off state houses at half price to a liquor company. As a taxpayer I just can’t wait to be “better off over all” in that world.

46 comments on “Social housing providers ”

  1. b waghorn 1

    Here’s a idea why not sell them to there tenants for a cut price get some good people in to advise the prospective owners about the in s and out of mortgage’s . these houses were probably built and payed for at pre 1970 s prices. Although I doubt national can get there head around putting people ahead of buisness’s

  2. RedLogix 2

    Nah – that was a rather unfair line in the Herald

    A quick look at their site strongly suggests that they are a bit more than just the “liquor company” you characterise them as.

    And one that has operated a pretty good social contract for a long time now. Most people living in the area regard them as a positive (or a least bad) presence in the community. A Licensing Trust is not really a company in the ordinary sense:

    Licensing Trusts, a form of community enterprise, were given a unique mandate when they were formed in the 1940s. Today that translates into:

    A primary responsibility to enhance the well-being of their defined community;
    The distribution of (surplus) profits back to their communities;
    The provision of good, ‘model’ facilities;
    Accountability back to the communities who own them.

    In addition, there is an inherent responsibility to efficiently operate commercial businesses profitability.

    And from experience I know they are a reasonably decent landlord operating consistent policies. There are way worse private landlords about.

    • ghostwhowalksnz 2.1

      It would be better to describe them here:

      “Sixty years after its formation the Masterton Licensing Trust remains the governing/controlling organisation of the group as 75% owner of Trust House Limited, which was formed in 1998 to better co-ordinate and operate the diverse business enterprises of the Trust.

      Two sister licensing trusts, Rimutaka and Flaxmere, which became closely linked with Masterton in the 1980s, were formed in 1963 and 1975, and like Masterton, are actively involved in their communities.

      We began life by building and operating bars, restaurants, and hotels. Of those first businesses, only the recently refurbished Horseshoe remains today. But there is much more diversity today with a housing estate of 528 houses, three supermarkets joining the eleven cafes, restaurants and bars, six bottle stores, and two hotels. The organisation also covers a wider geographic area, with interests in Hawkes Bay, Manawatu, and Wellington as well as the Wairarapa towns.
      As licensing trusts they have regular elections the same time as councils.

      Whether to sell off state houses is one thing , but the stuff story is inaccurate as it sounds like a private liquor company, when its a community owned charitable enterprise.

      • RedLogix 2.1.1

        but the stuff story is inaccurate as it sounds like a private liquor company, when its a community owned charitable enterprise.

        It’s either a good example of a journo not knowing a basic fact about the story they are writing – or they did know – but chose to distort the facts to fit into today’s spin cycle.

        • tracey

          The Salvation Army keeps being mentioned by Key and others in his Government. Is this going to be like offering shares to “mums and dads first” knowing, or not bothering to find out, that they can’t afford them and the shares will go to companies?

          WHY has no one asked him why he thinks the Sallies can afford the homes? Have they told him? Where will they get the money?

          It’s just odd that our PM is now placing such faith in the SA…

          “Rt Hon JOHN KEY: If the author of that report really meant what they said, then the author actually needs to get out a bit more, because this is a Government that has done in Auckland a housing accord…. By the way, the officials who used to advise Helen Clark are some of the same officials who advise me, and they spent virtually their entire time in the Department of the Prime Minister and Cabinet giving her advice on housing, for which she did absolutely nothing. So if the author does not understand—” February 2014

          Twyford speaking to May budget 2014

          “The NGOs—the Salvation Army, VisionWest Community Trust, and all the others—are waiting for capital grants to help them get going so that they can build houses, ”

          rather suggests that at cut price or any other price the Sallies cant afford to get skin in this game.

      • millsy 2.1.2

        Anyone know who owns the other 25%?

        • RedLogix

          The other 25% consists of three sister Trusts which amalgamated with the Masterton one decades ago. While they retain their legal existence – for all practical business purposes it’s just one big entity.

        • tracey

          Total Number of Shares:10637000 Extensive Shareholding:No
          Shareholders in Allocation:
          Allocation 1:8000000 shares (75.21%)


          The Offices Of Masterton Licensing Trust, Level 1 4 Queen Street, Masterton, 5840 , New Zealand
          Allocation 2:2150000 shares (20.21%)


          The Offices Of Masterton Licensing Trust, Corner Chapel And Russell Streets, Masterton ,
          Allocation 3:337000 shares (3.17%)


          16 Swansea Road, Flaxmere, Hastings, 4120 , New Zealand
          Allocation 4:150000 shares (1.41%)


          C/- Flaxmere Licencing Trust, Swansea Road, Flaxmere, Hawkes Bay ,

  3. greywarshark 3

    Just a thought on the lack of housing for the needs of the present. I understand the situation in housing insurance policies causes problems for those claiming after disaster or destruction. I have heard that though insurance is prepared to pay out on it, they demand that you build again in that place a house to the equivalent of what was there before. But that is not helpful for the housing market.

    If someone has to rebuild to past norms then the opportunity to use that space and building for modern requirements is lost. And it might be better to sell the land and build elsewhere. I suppose everyone else knows about this but it has just occurred to me.

    And it would explain why insurance in Chch, when an area is zoned for no rebuilds, won’t pay out for building elsewhere. The people, after paying insurance all the years, would find refusal to help them after all. These would be some of the people who could need social housing.

    • tracey 3.1

      If you are atalking about a new house then I am surprised Council will issue a CCC (Code Compliance Certificate) based on prior, not current regulations?

      • greywarshark 3.1.1

        @ tracey
        I am thinking about the need for more concentrated housing. It might be that an innercity house could have a duplex put on the site so there are two dwellings where there were one. Or it may be suitable for light industrial or retail while the person buys their housing elsewhere. More along those lines than the details of some compliance code.

        And Ad yes, our NZ world is being dissolved in the acid rain of NACT’s determined attacking spray that undermines any defences.

        And RedLogix I have wondered about the Housing Associations that they have in Britain. We are slow to pick up on ideas here, I feel there must be a place for them and now would be it. How would line start and carry out useful stuff?

  4. Ad 4

    This is doing to housing what Max Bradford did to electricity in the 1980s.

    Within two terms of this kind of government we will have very little public housing left (perhaps other than in Christchurch).

    What we will have is a series of massive trusts – some with public good intent, others as tax minimising instruments – who will control most of the 60+% of New Zealand who cannot afford to buy their own house.

    This means the owners of those trusts don’t get to be held to parliamentary scrutiny, have no rent controls, no specific ethical codes in common, and whose sole regulator is the Tenancy Tribunal.

    Their next goals will be to do this to our entire public schooling system.

    New Zealand’s entire public realm is being dissolved before our eyes.

    • RedLogix 4.1

      Or we could consider it an opportunity to move towards the Housing Association model – which provides a space in the market somewhere between social housing and ownership that is an alternative to private sector renting.

      Of course it’s wrong that National are dismantling our social housing system in order to achieve a change. That’s their usual ideological stupidity and laziness in action.

      • tracey 4.1.1

        Agree with this IF there are genuinely players in the market who are not looking to make profit but fill a social need, who can actually afford to buy the houses OR raise a loan to buy the houses.

        • RedLogix

          It’s not hard. Here’s the website for Community Housing Federation Victoria

          Housing Associations manage a combination of DHS properties and/or own other properties. They range in size from 400 properties to as large as 2000+.

          More like a traditional rental option, these organisations manage and maintain the property using their own staff. Housing Associations are eligible to receive Government funding to build or acquire new properties. In the past the state government has transfered a small number of properties to Housing Associations.

          And this is just one model.

          Personally I’m thinking that rather than trying to hold back the tide on National flogging off the State Housing asset – that Labour would be smarter to be pushing for more transparent and socially acceptable alternatives around who actually finishes up purchasing them.

          • tracey

            is that one of the options our Government has in mind red? I haven’t seen any detail on what models they have in mind.

            • RedLogix

              Hence my concerns around transparency.

              The very, very worst thing that could happen is another free-for-all fire-sale that happened in the 90’s when the Nats last did this.

              Lots of speculators made out like bunnies on that one.

              • Tracey

                i am with you 100%.

                based on past behaviour the nats have little or no intention of doing anything other than selling to developers…

          • Ad

            What is missing is a proper price regulator for rents.

            Back in the day there were rent controls. No more.

            For both lines companies and generators, the Electricity Authority sets very clear controls on the amount these privatised utilities can charge, against the assets they hold. There are of course expensive court cases about this, but that’s natural when there’s such a huge amount of revenue at stake.

            Currently there is nothing to hold these massive private landlords to account.

            Of course there are a few good trusts operating housing at the moment. But what is there to stop there charging full market rents, for example? Nothing.

            This debate occurred over the last five years for example in the Community of Refuge trust, one of central Auckland’s largest landlords who bought a significant amount of housing stock from Auckland City Council – and are already in partnership with central government for a major housing development in Weymouth.

            • RedLogix

              First of all I’m not sure it’s fair to label a Trust or Community charity as a ‘private landlord’. We get all wound up when the right distort meanings to put their spin on it – it’s no prettier when we do it.

              But I do agree with the need for better regulation in the whole rental sector. I’ve argued for this many times previously – while wearing my hats as both a landlord and a tenant at the same time.

              I’m not sure that just straight rent controls are the whole answer. Overseas experience shows that they can badly distort the market with quite perverse outcomes. If for example rental incomes are fixed too low – then landlords simply stop maintaining or improving their properties. That’s not greed – it’s just cash flow.

              What I would prefer to just straight rent controls is a well resourced system that worked to protect the rights of both good tenants and good landlords. And made life harder for the bad ones.

              If you do that then the price thing tends to sort itself out. The DBH site already gives excellent transparency for rents – which has helped market efficiency a lot.

              • Ad

                I am not proposing any solution.
                But this is what you can expect in a few years, as corporations break open the public sector properly, trading on extracting about 1/3 of people’s income for a place to live:


                Nor am I imputing that all private landlords are bad. After all, I’m one.

                We have corporatized housing, out-sourced, it, and now privatised it. Even within Trusts there is zero public accountability. I am simply stating that only a strong public housing sector can best guarantee a house over my head at a reasonable cost, and further degrading this part of the public realm degrades society as a whole.

              • Ergo Robertina

                And there’s loads of genuine charities and community organisations involved in providing social care, such as DHB home help, which don’t pay a living wage, provide job security, professional development, or decent mileage rates.
                Their argument is they work with funding parameters set by the government, and if they relinquish the work it will all be left to corporates. But it’s made hypocrites of them.
                The state housing selloff will create a similar situation of lower standards and entrenched exploitation.
                Read David Harvey’s book on neoliberalism in respect of the role of NGOs as enablers.
                A good rental WOF as proposed by the Greens will prevent the perverse outcome you conjured in regards to rent controls. They are needed urgently.

                • RedLogix

                  I agree that becoming the defacto agents for the state does create issue for many social providers, mainly because as individual operations they lack negotiating clout with the govt.

                  Problem might go a long way toward being solved if they formed an umbrella organisation that is willing to fight for minimum standards on their collective behalf. Somewhere above I linked to a similar sort of entity that represents all the many dozens of social housing associations here in Victoria – so it can be done.

                  A good rental WOF as proposed by the Greens will prevent the perverse outcome you conjured in regards to rent controls.

                  Couldn’t agree more. All our units would fly through the Greens WOF proposal I saw with room to spare. Bring it on.

                  But you can’t really implement a WOF and the rent controls Ad was suggesting at the same time.

                  • Ergo Robertina

                    ‘But you can’t really implement a WOF and the rent controls Ad was suggesting at the same time.’

                    Why not?

                  • Ergo Robertina

                    ‘Problem might go a long way toward being solved if they formed an umbrella organisation …’

                    My point is the real world outcomes of the system that’s been in place for 20 years.
                    And what you suggest is likely to fall foul of the terms of tender processes anyway.

                    • RedLogix

                      Professional and trade bodies exist for this exact purpose all over the place.

                    • Ergo Robertina

                      But you touted your ‘umbrella organisation’ as a solution to the problem of worker exploitation and low ball contracting, thus I assumed you meant something different.
                      Existing bodies like the NZ Home Health Association appear to have been ineffective, despite making submissions etc about the problems of low funding and worker pay.
                      What will your organisation do differently?

                  • Ergo Robertina

                    ‘But you can’t really implement a WOF and the rent controls Ad was suggesting at the same time.’

                    In the absence of an answer to my question above I will infer you mean that without the cashflow of high rents landlords can’t afford to get their properties up to scratch.
                    Thing is though good landlords like yourself would ‘fly through’ the Greens’ WOF scheme now.
                    Why should the bad ones get longer to gouge tenants just because they made poor choices and haven’t maintained their properties?
                    If a few decide it’s not worth their while and sell their ‘investments’ to first home buyers, that’s a good outcome. Same with the reduction in hospital admissions caused by respiratory illnesses from substandard housing.

            • Tracey

              average rent increase of $24 a week. …

        • minarch

          “Agree with this IF there are genuinely players in the market who are not looking to make profit but fill a social need’

          the two aren’t mutually exclusive you know ?

  5. NZJester 5

    The Salvation Army will be very unlikely to be able to afford any of the houses without cutting back on other important services they currently offer to the sick and needy groups such as food and clothing. Things that a lot of people they help can no longer count on the government for. Now they want the Salvation Army to also try and supply the poor with houses on the existing budget they have?
    Using the Salvation Army name is just a big lie unless they are willing to give them the houses for free.
    Even given free to them the Salvation Army might find the cost to high as a lot of the houses need a large injection of cash to be repaired as the government has been very lacking on the maintenance needed on a lot of them to keep them in a habitable condition.
    I can see a lot of the sick and needy people going without food and clothing if the Salvation Army did take the government up on the offer of taking over those houses.

    • Ad 5.1

      Oh, they can afford them.

      Check out the Salvation Army properties on the Ak Council website. Whether developers are inside a trust or charity or a business, banks understand equity wherever it is.

      • RedLogix 5.1.1

        Agreed. Banks look at three main criteria – equity, serviceability and credibility.

        If the Sallies buy them for 50% of market value that takes care of the equity and serviceability.

        And as a sound organisation with decades of social work experience – they also have the credibility to manage the loan. Something many social housing tenants on their own simply do not have.

    • greywarshark 5.2

      ! NZ Jester
      And the poor are being bled more for second hand clothes and other things. The SA prices have been going up for some time. Also other well known charities, St Vincent de Paul, Red Cross. Anything really cheap or free is likely to need sewing, mending, or is marked, spotted, or the surface rubbed and worn. The government loves to tell us there is no free lunch. But then it wants to operate in denial of that basic truth itself.

    • Treetop 5.3

      I’m with the free concept (capped at 20% of homes), but with a gradual increasing dividend paid to the government dependent on profit.

  6. Penny Bright 6

    Let’s get it right.

    State Housing is public – Social Housing is PRIVATE!

    Beware the use of charities and Iwi as Trojan horses for the PRIVATISATION of State Housing – the sell off of this major State asset for which there is NO electoral mandate!

    The simple answer is for State tenants to stay put – refuse to accept 90 day eviction notices – refuse to budge – and for those who are opposed to the privatisation of State Housing to support them.

    As has happened with Niki from the Tamaki Housing Group in Glen Innes.

    Penny Bright

  7. coaster 7

    If a liquor trust has a chance to buy a half price house, why cant mum and dad investors.
    I would like a half price house.

  8. A voter 8

    Easy money, no morals ,wont sell or mortgage to tenants cant be bothered ,Im here to tell you the Mickey Savage history is over you idiots, Im the Capitalist Antichrist of the socialist history of NZ and any hope the poor have will be lost
    And turn it into another American military base like Hawaii you know its about the same strategic position in the Pacific but south
    Cheers NZ I will stay pissed for you

  9. Treetop 9

    The government are not interested in housing. They need to stop their STALE bullshit and just hand over 20 % of the state homes to the Salvation Army. Then some people with families living rough, just may get a decent roof over their head. Instead the government just piss about trying to sell precious assets which can be made over by more intelligent management which actually cares about housing.

    A lot has been handed over by this government already e.g. partial privatization.

    Some sort of dividend could be paid to the government.

  10. Religious groups are the last people who should be in charge of social housing ,
    The are judgemental and biased .
    If in their narrow minds you have been naughty then no house.
    Dickens must be turning in his grave.
    Just imagine those Tory religious Blue Rinses deciding who is deserving of a social house . I shudder , and I wonder just what has happened to our lovely egalitarian country . I cannot believe we have allowed our country to have such a ghastly right-wing government ,

    However on a brighter note it was good to meet Penny last Saturday at the protest meeting in Hamilton. Nice to have meet you Penny .

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