Social housing’s ‘graph of doom’

A Wellington social housing review has found properties are not affordable for many tenants and are not financially sustainable, with a ‘‘graph of doom’’ predicting a $160 million shortfall.

The independent review examined the Wellington City Council business unit responsible for providing and managing the capital’s social housing portfolio, which is made up of 3400 tenants living in 2090 housing units.

The 100-page ‘‘state of nation’’ review asks ‘‘critical’’ questions about issues such as the financing of city housing, cost effectiveness, investments, the council’s definition of being a social housing landlord, the purpose of social housing, the level of discounting, rental incomes and accountability.

The discussion document, published in October 2017, was released to Stuff under the Local Government Official Information and Meetings Act. It aimed to challenge the way things were done to ensure tenants received the appropriate service.

‘‘At the heart of this report is the message that the council expects city housing to be selfsufficient, to discount rental income below what other landlords receive, and do more than what is required of a landlord … however, there is a fundamental disconnect.’’

The report found two-thirds of tenants were paying more than 35 per cent of their income on rent.

The council had an affordable rent supplement to provide further discounts for those tenants, but it was not highly publicised.

If every single person applied and was granted the supplement, it would cost $4m a year – 17 times greater than the level currently provided, the report says.

‘‘City housing properties are not affordable … this is particularly acute for tenants living on their own … this raises questions about the extent to which these tenants are set up to succeed.’’

At the time of the report, the debt level of rent arrears was $134,000.

The report notes the application process for prospective tenants is ‘‘bureaucratically weighted’’. It also says the council’s Housing Upgrade Programme (HUP) set high expectations about what city housing could deliver, and this needed to be considered again in

relation to what it could afford.

Revenue came from tenants who generally had very limited disposable income, so protecting the interests of all tenants meant questioning the way things were done to ensure funds were spent wisely, the report said.

The council spent $173m on 10 HUP complexes in eight years, compared to $11m for non-HUP properties.

Some properties were upgraded beyond the design standards agreed by the Crown and cost up to 50 per cent more than than the standard building code.

City Housing Manager Michelle Riwai said the $160m shortfall was a worst-possible case scenario based on financial modelling in 2016.

‘‘Since then changes have begun and further changes are being worked through with elected members.’’

The report found a number of areas for improvement, including a clear and agreed understanding of the role of the council in providing social housing, improving the way it measures and monitors its performance and ensuring housing was affordable for all tenants, she said.

Councillor Andy Foster, who is chairman of the finance subcommittee, said the council clearly had a problem but it was not a crisis yet.

Business as usual would not work, and the council needed to make changes to have a sustainable housing portfolio.

Referring to the report’s ‘‘graph of doom’’, which showed $160m in the red, he said: ‘‘The sooner change is made, the better’’.

Councillor Brian Dawson, who leads the housing portfolio, said there were some obvious issues of concern, but he was comfortable city housing was addressing them.