Source: New Zealand Government
New Crown lending facilities and a loan guarantee scheme will support the growth of the Community Housing Provider (CHP) sector and put CHPs on a more level playing field with Kāinga Ora, Housing Minister Chris Bishop says.
“This Government believes in social housing. We are working hard to deliver better housing to those who need support, including by assisting the CHP sector to expand and grow.
“Currently, CHPs account for 16 percent of our social homes – around 13,000 houses. The government has funded an additional 1,500 social houses in Budget 2024, 1,000 of which are to be delivered by CHPs from June this year.
“Our ambition for the social housing system is for a level playing field between CHPs and Kāinga Ora. The underlying ownership of a house – whether public or private – should be irrelevant. What matters is the provision of warm, dry homes to those who need them, along with social support if required.
“We call this competitive neutrality. In some areas and for some people, CHPs are the answer. In other areas, Kāinga Ora will be the way to go.
“While KO’s borrowing is done through the Crown, CHPs currently access debt from the private market at higher rates. We have further work to do to better align KO and CHP access to, and costs of, finance.
“The Government is moving to level the playing field between Kāinga Ora and CHPs by establishing Crown lending facilities of up to $150 million for the Community Housing Funding Agency (CHFA). CHFA was launched by Community Finance in 2024 and pools financing requirements for CHPs, unlocking lower cost finance at scale to support the delivery of CHP housing.
“The Government is working closely with CHFA and will provide them an interim lending facility in early April to support their immediate financing needs, with the final liquidity facility up and running later this year.
“This will lay the foundation for CHFA to borrow hundreds of millions or billions of dollars, supporting not just the delivery of social housing, but also CHPs’ broader affordable housing portfolios.
“We are also exploring the appetite of banks to participate in a loan guarantee scheme for CHPs, aligned to the principles of previous initiatives like the Business Finance Guarantee Scheme, and the North Island Weather Events Loan Guarantee Scheme.
“A loan guarantee scheme is where the Government takes on some proportion of the loan’s default risk, meaning lenders won’t need to hold as much capital to cover the debt and can use the capital elsewhere. This will likely enable lenders to pass on reduced interest rates to borrowers.
“I expect that this scheme will encourage greater participation by banks in the sector and enable them to pass on meaningfully reduced interest rates and other lending accommodations to CHPs.
“If banks see merit in a CHP loan guarantee scheme, the Minister of Finance will finalise its design and work towards a go-live date later this year.
“Together, these two initiatives will increase the scale at which CHPs can access lower cost debt financing, enabling them to grow.
“This is a really exciting day for the CHP sector in New Zealand. The changes are complex but important and will do a lot to allow the CHP sector to grow and deliver more warm dry houses for people in need.”
