Funding the future of City Housing

Since the 1950s, the Council's social housing service has been providing homes to a vibrant and diverse community of more than 3,000 Wellingtonians on low incomes and the Council wants to continue to play a strong role in social housing.

But it's common knowledge that City Housing has been struggling financially for the last several years. 2023's projected operating deficit will be $10 million and, without intervention, this deficit will only grow. City Housing also requires a $286 million+ investment in housing upgrades, as phase two of its programme of work to meet Deed of Grant commitments to the Crown and Healthy Homes Standards.

This is why the Council is consulting on proposals for change.  But importantly, no matter the consultation outcome, current tenants will continue to have a secure social housing tenancy.

Angelique Jackson, City Housing Manager, says City Housing can't continue to operate, let alone thrive, with revenue coming solely from tenant rents.

"Rents are set at approximately 70 percent of the market rate and, as a result, are increasingly unaffordable for many. A new funding model will mean a sustainable and affordable future for Wellington’s social housing and its tenants."

So, here are the proposed options: the Council funds and continues to operate City Housing by increasing rates and borrowing from the bank, or it sets up an independent Community Housing Provider to manage the service. The Council's preference is to set up a Community Housing Provider (CHP).

Setting up a Community Housing Provider

Setting up a CHP could be done in three different ways. These involve the Council either selling or long-term leasing its housing assets to the CHP, with varying degrees of responsibility for major maintenance. Each option also affects council funding contributions to upgrades and new builds. The Council's preference is to lease its housing assets to the CHP, while managing current upgrades and providing upfront funding to enable the CHP to build more social housing over time.

If the Council were to continue running City Housing, its service would remain very much the same. However, a CHP would gain access to new government funding sources to build more social housing. It would also enable new, eligible tenants to receive the government's Income Related Rent Subsidy (IRRS), which basically caps rent at 25 percent of tenant income, the same as Kāinga Ora and existing CHPs. For the CHP options, the Council would continue to explore ways to make rent more affordable for current tenants, who would not be eligible for the IRRS.

"This is an exciting time for City Housing, and for Pōneke, with the potential to make future-proofing changes to our housing provision which are overdue", says Angelique.

" We’ve researched and learned from other cities in Aotearoa about the benefits of a CHP model. But we are keen to hear from our tenants and the wider public about what they think of the options so that councillors can make an informed decision.”

A decision on options for future funding of City Housing will be made at the Annual Plan / Long Term Plan council committee meeting on 30 June 2022.