Remember the Government announcement that the sale of Housing Corporation houses was to build local capacity in the social sector? Well it looks like only those organisations that have an existing capacity to purchase at least a hundred houses need apply.
Charities wanting to take part in state house sales have been told, be prepared to buy big or don’t bother.
A document provided to charities and financial players who had expressed an interest in the Government’s state house “transfers” shows that the Treasury is only interested in buyers prepared to buy “at scale”.
In January John Key signalled the Government would look to sell 1000-2000 state houses to charities this year, as part of a plan to provide more social housing.
In May Finance Minister Bill English and Social Housing Minister Paula Bennett said the first houses to be sold would be in Invercargill and Tauranga.
Treasury has revealed that all of the houses in each city – 370 in Invercargill and 1250 in Tauranga – could be sold to a single buyer. At a minimum, Treasury would look at selling at least 100 houses to each buyer because of the cost of transactions.
“Our current thinking is that we will transact at scale, the upper end being the entire portfolios in each region and the lower end potentially being one or two hundred,” Treasury told potential buyers.
“Transacting at scale” is synonymous with “selling at a fire sale”.
Originally the policy was all about capacity building in the social sector. Now it seems that the existing capacity will need to be significant before an organisation can even think about being involved.
The language used by the Government has changed dramatically over time. For instance back in November last year Paddy Gower asked Paula Bennett this question:
… we’ve talked to some community housing providers, and they’ve said, ‘Yes, in practice, this is a good idea, but how do we get into this. It’s too much for us to do. There’s too much development required. We don’t have the capacity to do this overnight’. In fact, one of them said to us, ‘We are worried that this is about destroying the state-housing sector’.
Bennett replied in this way:
So it’s by no means about destroying the state-housing sector. In fact, it’s the complete opposite. I well accept that they’re not up to capacity, and that’s part of us starting somewhere and making a difference. So the income-related rents makes a big difference. That follows the individual and can go to a provider, but we have to start somewhere. So some of it is some of those state houses going to those community housing providers. It means they have an asset. They can then partner with either developers or with banks and borrow more money that they can build more.”
The sell off was being proposed supposedly as a means of giving local organisations the chance to get an asset and develop capacity but the reality was that it was an ugly sell off of housing required for the most needy.
Bennett kept spinning this idea that it was all about local capacity building. For instance in May of this year 3News reported this:
Ms Bennett says providers in other regions have also expressed interest. “This is a great opportunity for these areas to deliver services locally. We know that vulnerable New Zealanders do better when services are delivered by local people for local people.
To afford the purchase of a hundred plus houses and the management of tenancies for each will require major resources. The Australian company Horizon Housing has expressed interest. Locally only the likes of Salvation Army could even think about doing this and the Sallies have ruled out any involvement. Major Campbell Roberts set out a very good test that ideally would be met before any privatisation and redevelopment of properties occurred. He said previously that if the Salvation Army became involved it would be “morally wrong for the army to force tenants out for redevelopment without their consent, and that any state houses that are sold should go to genuine local community organisations part-governed by the tenants themselves.”
So be prepared for the end result to not be the strengthening of local organisations so that social services can be provided locally but to be a wholesale sale of state houses at a knock down price.
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