Sale of Nelson community housing could fuel further investment

Mar 27, 2019 | News

The Renwick Flats on Examiner Street – photo by Martin de Ruyter/Stuff

The amount of community housing in Nelson could expand if council’s proposal to sell its portfolio to other housing providers is approved.

In its 2019/2020 Annual Plan Consultation Document, the Nelson City Council has outlined its plan to sell off all 142 properties in its community housing portfolio.

The document is set to be adopted at a council meeting on Wednesday, before going out for public consultation.

The recommendation is to sell the properties to one or multiple social housing providers.

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Initial negotiations were made with Housing New Zealand about selling the portfolio, with the Nelson Tasman Housing Trust subsequently making a proposal to purchase the units.

Other local providers, including Abbeyfield and Habitat for Humanity, have also expressed an interest in being partners.

Mayor Rachel Reese said the proposal was driven by a need to create more social housing in Nelson.

“In the past three years demand for social housing has grown incredibly.”

Reese said the council’s waitlist hit all time highs in the past year, with up to 60 people on it at the same time.

The Nelson Tasman Housing Trust currently has the ability to bring in five new vacancies per year, and are averaging about five inquiries per week.

“There is insufficient social housing in Nelson, so we’ve looked at how we can leverage our resources,” Reese said.

“We believe we have an opportunity by partnering with others, and giving them the opportunity to be the owners of land, they can use that as security for capital development.”

With the sale of the housing portfolio, the council is proposing to use the proceeds to fund further investments in social housing.

However, any future investment would be in partnership with other organisations, with the council not seeking to own or act as landlord for any future properties.

The current housing situation is also creating a financial strain for the council, with upcoming maintenance and upgrades to the housing portfolio estimated to cost about $20 million.

Costs previously covered by rents are now being subsidised by rates to the tune of about $160,000 per year (or $8 per ratepayer).

The current housing portfolio has a net book value of $8.38m, with Quotable Value Ltd calculating the rateable value of the land as $16.5m in September 2018.

If the sale of the portfolio were equal to the net book value of $8.38m, there would be a $521,000 saving in rates ($361,000 from interest costs, $160,000 from annual council spending).

Currently 152 people live in community housing in Nelson, mainly in the over 55 and over 65 age bracket.

The consultation document states the council will negotiate a Memorandum of Understanding with the purchasers, outlining plans to upgrade community housing, maintain the current amount of units, and consider the wellbeing of tenants in the design.

Current tenants would likely have to be reassessed for eligibility, although council expected all would be able to continue their tenancy.

While a Memorandum of Understanding is not legally binding, the council considered the risk of a provider not following it would be minimised by restricting purchasers “to those who have a demonstrable commitment to providing community housing”.

Along with council’s preferred proposal there are six other options in the consultation document, from retaining the current model to private sale on the open market.

Submissions on the consultation plan will open to the public on March 29, with all submissions to be received by council by 5pm on May 2.

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