By MORGAN REEVE and LISA MEIN, senior urban designers, Boffa Miskell Ltd
Morgan Reeve and Lisa Mein both have experience of working with Housing New Zealand Corporation. Morgan was previously employed as Housing New Zealand Corporation’s (HNZC) urban designer and Lisa has worked on many HNZC projects in addition to regeneration projects in the UK. This article is an opinion piece based on their experience and research, and is not intended to represent the views of the government or of HNZC.
In the relatively affluent times, now past, housing affordability was a key economic, social and cultural issue.
The increase in house prices relative to incomes over the years has been marked. That combined with, until very recently, high interest rates have meant that first time buyers were finding it increasingly difficult to buy a home.
High house prices have lead to a greater need for rental accommodation and particularly social rented accommodation. Demand has far exceeded supply and in our current period of economic recession, we may witness an increased demand for and more attention to the issues of social and affordable housing. In contrast to the rising need for more affordable housing, very few new homes are being constructed. The need for affordable and social housing is likely to be further exacerbated by the drop in supply.
In this article we explore the history of social and affordable housing in New Zealand from the first state houses of the late 1930s through to recent times. We draw some lessons from overseas, particularly the UK, Australia and the United States. Finally we comment on the future and in particular building sustainable communities in our country.
Golden era of social housing
Although successive governments had dabbled in constructing workers’ dwellings as early as 1905, it was not until the election of New Zealand’s first Labour government in 1935 led by Savage that a massive scheme of state house building began. The official opening of New Zealand’s first “state house” in 1937 heralded the golden age of social housing.
During the pre-war years and immediately following the war, government was the primary house builder. At its peak 57 houses were being completed a week[1]. This golden era lasted until the 1950s, when the government mandate changed; offering state housing tenants the opportunity to purchase their state rental home.
The initial state housing was constructed in suburbs. These suburbs included all the infrastructure or community assets to create sustainable communities; communities of mixed tenure, whereby all New Zealanders had the opportunity of a decent home.
The state houses of this era were well-constructed using high quality materials and better than the alternative rental stock. The first state houses were intended for working class families. Living in a state house became accepted by many as a first step on the housing ladder.
Change in perception
The 1950s witnessed a shift in national psyche – the rising kiwi dream of home ownership. This coincided with other government reforms to state housing including raising state housing rents to narrow the gap between state and private rentals, offering existing state housing tenants the opportunity to buy, and lowering the income limit for new tenants.
Although the government was still building social housing, the emphasis had changed.
Under the first Labour Government the houses were of a high quality and the tenants were selected to ensure a balanced community. Successive governments lowered quality to
[1]Schrader, B. (2005) “We call it home – a history of state housing in New Zealand”, Reed Publishing
reduce costs and focused more on meeting targets. National under Holland introduced needs-based assessment restricting housing to the poor, which created concentrations of poor people. The second Labour government led by Nash introduced several higher density housing forms – multiblocks and Starblocks – which were to prove unpopular and create issues around letting.[2]
In Porirua East, for example, the government would match funding provided by the community to build facilities such as halls. As the community could not raise the funds, some of these facilities were never built. The jobs around which the suburb was founded did not eventuate; resulting in long commutes to Wellington.
The change from building communities to building ‘houses’ created social issues according to an Anglican Church report in 1963, and subsequently the 1971 Commission of Inquiry into Housing.
Successive governments changed the approach to providing housing, ‘pepper potting’ developments through communities. However the damage was done – areas such as Otara, Aranui and Porirua East, with high concentrations of state-owned rental accommodation and a lack of community infrastructure, had serious issues and the public perception of social housing was synonymous with ‘slums’ [3]
Housing NZ’s role
While HNZC has tried to ‘pepper pot’ new developments, there have been several challenges to achieving this goal. Firstly, there are more opportunities to acquire housing where land value is low, and clearly less where land value is high. This means there is a natural tendency to cluster housing projects in lower socio-economic areas, and it is very hard to enter areas with low concentrations of social housing. Further, many of the developments offered to HNZC have significant proportions of private rentals rather than owner-occupiers. This means that even though HNZC ownership is dispersed, there can still be a clustering of similar tenures with similar issues – and the aim of getting a more mixed community is not being met.
Private developers have proven reluctant to sell portions of a private development to HNZC, fearing the risk of selling the remainder to the private market. They will often offer that HNZC could take the whole development, or none at all – which increases the pressure on HNZC to acquire larger concentrations of housing than they may otherwise be comfortable with, or be locked out of the market.
There are existing problems with the large, concentrated areas of social deprivation in which HNZC often has a significant presence. Interestingly, these areas will often develop a very strong community spirit, social networks and bonds. It can be the case that areas of high concentrations of HNZC stock are also areas of high demand - for example Otara and Mt Roskill.
Finally, there are the issues of maintaining significant ageing stock. Most HNZC houses are 40-50 years old. Modernisation and improvement to the asset has to balance the condition of the stock, expected life span of the building, underlying land value and any opportunity cost that may be lost through upgrading. Sustainability, or specifically energy and resource efficiency also has to be considered. With a limited amount of money, the fundamental question will always be whether to spend a large amount of money on a small amount of houses, or a smaller amount of money on a large number of houses.
In recent years, HNZC has demonstrated that it sees its role as greater than just that of a social housing provider and landlord i.e. maintaining houses and managing tenants. Programmes such as Healthy Housing look at the wider issues facing families, as well as upgrading the housing. Ongoing commitment to the Community Renewal programmes throughout the country indicates that HNZC recognises its role in addressing problems that go beyond ‘bricks and mortar’.
][2]Schrader, B. (2005) “We call it home – a history of state housing in New Zealand”, Reed Publishing
[3]Schrader, B. (2005) “We call it home – a history of state housing in New Zealand”, Reed Publishing
HNZC is also directly influencing the provision of third sector (or not-for-profit) housing. This is through Community Group Housing that provides rental homes for government-funded groups or organisations that provide residential community services such as women’s refuges, emergency housing and housing for people with mental health issues.
The Housing Innovation Fund (HIF) has been used to directly fund community providers. In particular this fund has been used by councils to upgrade their existing portfolios of social housing. This fund is currently under review, although indications are that the government intends to continue with it in a more focused manner[4]
Furthermore HNZC has supported the provision of housing on Maori owned land through the Rural Housing Programme, and the provision of Papakainga loans.
Both the previous and current Governments are prepared to intervene more directly in the provision of affordable housing for home ownership, as opposed to providing social housing. For the first time in many years, the Government has stated that Crown-owned land could be sold to the public and existing tenants. The ‘Gateway Housing Initiative’ is currently being explored whereby land in public ownership is developed for first-home buyers or in partnership with community housing organisations. The land would be leased from HNZC with a right of purchase after 10 years (or earlier if possible), and the owner is responsible for building the house.[5]
Within the Community Renewal and Neighbourhood Improvement areas, land will be made available to facilitate a more mixed community. The Government has also piloted a shared equity scheme, where the government will retain a 30 per cent ownership of the house.
Establishing mixed communities
Two very exciting recent projects illustrate a wider emphasis on the growth or establishment of communities and the provision of a mix of tenures. In 2002 HNZC purchased the de-commissioned Hobsonville airbase in Auckland, and through the Hobsonville Land Company is facilitating the development of 3000 houses; a mixed-use area including a marine industrial precinct; school, open space and a range of community facilities. The housing will include affordable first-home ownership, and until recently, also included a proportion of state-owned rentals. Recent indications from the current government are that the project will not include any new HNZC homes.
Also of interest is the recent announcement of the Tamaki Transformation Programme. This is an expansion of the HNZC Tamaki Community Renewal to include a variety of other agencies particularly Auckland City Council, and address wider issues beyond the housing stock. While this is in very preliminary stages, it acknowledges that tackling the social issues associated with areas of high deprivation includes dealing with not only housing but also the social infrastructure, including employment, education, and health.
Both projects demonstrate a renewed commitment to the development of communities, community infrastructure, and the establishment of a range of housing tenures. These projects are reminiscent of the planned developments of the 1940s. As in those earlier times, HNZC is exploring the development of new building standards through the introduction of sustainability measures into the master-planning of the developments and construction of the houses.
Discussion about the provision of social and affordable housing has focused primarily on Housing New Zealand Corporation because it is a dominant player in the field and has been and continues to be used as a vehicle to implement government policy. However, it cannot achieve everything in isolation. Overseas examples indicate that non-government providers
[4] Government policies for increasing the supply of affordable housing’ Blair Badcock http://www.hnzc.co.nz/hnzc/dms/6894543495FEC9588C686436C9ED51F5.doc
[1]
[5] Government policies for increasing the supply of affordable housing’ Blair Badcock http://www.hnzc.co.nz/hnzc/dms/6894543495FEC9588C686436C9ED51F5.doc
have a major part to play in the delivery of a range of housing options. These include local authorities, not-for-profit and the for-profit delivery sector. While all of these exist in some form in New Zealand, they do not exert the same influence in the provision of social and affordable housing as elsewhere. The principal third sector parties here in New Zealand are providing housing targeted at a specific need (such as elderly, or mental health) and could be considered removed from the mainstream housing market.
Lessons from overseas?
The UK Housing Corporation has a range of functions designed principally to fund the development of affordable housing in England through a variety of providers, and to regulate and facilitate the proper performance of the Registered Social Landlords (RSLs).
Affordable housing, as defined by the UK Department of Communities and Local Government, includes social rented and intermediate housing provided to eligible households whose needs are not met by the market. Social rented housing is akin to state housing here in New Zealand; intermediate affordable housing is housing at prices and rents above those of social rent but below market price or rent. These can include shared equity and other low cost homes for sale.
The recent history of UK and New Zealand planning legislation shares similarities, however, the English 1990 Town and Country Planning Act included Section 106 that differs in that it enables local planning authorities to require a proportion of housing development to be affordable on a site-by-site basis. The affordable housing could be either social rented housing owned by housing associations, or low cost home ownership.[6]
Christine Whitehead [7] notes that the policy has been successful in terms of numbers; there has been an increasing amount of affordable housing being delivered, and it is being concentrated in the areas where the need is greatest. She concludes that England would not achieve the same level of affordable housing through ‘traditional’ means. The planning-based system as part of the toolbox for delivering affordable housing and direct government support will always be necessary.
In the past decade within the English system there has been a large transfer of stock from council ownership to housing associations. This, combined with the housing provided through s106, has created a very large third sector. It has been suggested that if New Zealand wants to grow the third sector provision of affordable housing, it should consider transferring large numbers of HNZC stock to establish a ‘critical mass’.
Interestingly, while there has been an increased focus on creating mixed communities and delivering affordable home ownership, the volume of 100 per cent social housing has fallen considerably.[8] Part of the intention has been to divide the housing estates, which parallels a reduction in funding available for social housing. Even with the support of the S106 provisions, social housing still needs a subsidy to be viable.
Whitehead suggests that even in a system that is delivering a large amount of affordable housing through the market, there is still a place for direct government funding, involvement, and 100 per cent social provider ownership to ensure that social housing is provided. This model suits some tenant groups (such as elderly). (Note: above illustrations by Boffa Miskell).
Research shows pepper potting is equally effective if the houses are clustered rather than evenly dispersed. New Zealand is better able to address this issue than the UK, as HNZC directly builds and acquires housing itself, whereas the English equivalent (Housing Corporation) principally provides funding and regulation.
[6]Whitehead, C ‘Planning Policies and Affordable Housing: England as a Successful Case Study?’ Housing Studies, Vol 22, No 1, 25-44, January 2007
[7]Whitehead, C ‘Planning Policies and Affordable Housing: England as a Successful Case Study?’ Housing Studies, Vol 22, No 1, 25-44, January 2007
[8]Whitehead, C ‘Planning Policies and Affordable Housing: England as a Successful Case Study?’ Housing Studies, Vol22, No 1, 25-44, January 2007
How does this compare with the New Zealand system? England has the benefit of 19 years with the s106 provisions, whereas the Affordable Housing: Enabling Territorial Authorities Act 2008 was only passed last year. It is too early to tell if this will be successful, but indications are that the current National Government will review the Act, although they too are committed to provision of affordable housing[9].
Whitehead notes that the acceptance and support of mixed communities at all political/governance levels, and within the planning profession, has been critical to the success of these English policies. The provision of affordable housing is inextricably linked to the overall housing market; as this market has slowed so has the delivery of affordable housing.
More recent reviews have also identified a need for housing supply to be increased through enhancements to the planning system.[10] Overall, the English system has been successful in delivering affordable housing, and given the similarities in our respective planning legislations, it could be a model that is applied in New Zealand. As a cautionary note, to be successful requires commitment from both central and local government.
Social and affordable housing in Australia is governed by the Commonwealth State Housing Agreement (CSHA) that sets out policy and funding. Recent history has seen housing targeted increasingly at specific groups with higher needs. Recent changes in policy have predominantly looked at internal changes to the CSHA. The whole policy itself was due for review in 2008.[11]
Several issues have been identified concerning the provision of affordable housing in Australia including: a decline in funding; a decrease in the quantity of housing available and a subsequent increase in demand. The lack of a strong central government policy has been identified as a limiting factor. The provision and implementation of affordable housing has been on a state-by state basis.
As in New Zealand, Australia has very limited private investment in the affordable housing sector. While they have supply-side subsidies such as grants for first home ownership, they do not have financial incentive schemes to encourage investment in affordable housing. [12] This has meant they have a small not-for-profit and for-profit development sector.
In many ways, New Zealand appears to be in a stronger position than Australia in terms of delivering affordable housing. There is leadership at central government level through the Department of Building and Housing; the Housing Strategy provides overall guidance, and HNZC is well placed to inform and implement policy. Furthermore, the past decade has witnessed substantial investment in public housing and this seems set to continue. So what can New Zealand learn from Australia?
New Zealand has followed Australia’s lead in community renewal developments, where they have successfully reduced concentrations in large areas of social housing. This has been effective in delivering a mixed community and good social outcomes, but in some cases it has been funded by divesting stock and lead to a lower overall provision of affordable housing.
[9]www.beehive.govt.nz/release/affordable+housing+enabling+territorial+authorities+act+2008+be+reviewed
[10]Dr Gurran,G, Dr Milligan, V, Bugg, L-B, Assoc Prof Baker, D ‘International practice in planning for affordable housing: lessons for Australia’ AHURI Research and Policy Bulletin, Issue 105 July 2008
[11] Prof Berry, M, Prof Whitehead, C, Dr Williams, P Assoc Prof Yates, J ‘Financing affordable housing: A critical comparative review of the United Kingdom and Australia’ AHURI Research and Policy Bulletin Issue 84 October 2006
[12] Dr Gurran,G, Dr Milligan, V, Bugg, L-B, Assoc Prof Baker, D ‘International practice in planning for affordable housing: lessons for Australia’ AHURI Research and Policy Bulletin, Issue 105 July 2008
Australia has lead New Zealand in delivering high quality, pepper potted medium density developments, although within recent years New Zealand has arguably caught up through its redevelopment and community renewal programmes.
Australia has more experience with delivering complex developments through a partnership model, for example Kelvin Grove Urban Village in Brisbane. The development sector has more experience in delivering large, comprehensive master planned developments.
Although developers are not specifically delivering affordable housing, they are increasing housing stock and could easily become a vehicle to do so.
Some states in Australia have set up Urban Development or Redevelopment agencies, such as the Urban Land Development Authority (UDA) in Queensland. Under the Urban Development Authority Act 2007 (Qld), an area may be declared by regulation, and a development scheme is prepared by the UDA.
Applications for development in the area are assessed by the UDA, as it effectively takes on the roles of the landowner, developer and local council.
Changes to the Integrated Planning Act (1997) also allow for Regional Plans and Masterplans to be prepared in designated areas. The Masterplans are to occur in high growth areas where integrated planning and investment from state and local government is seen to have a positive benefit.[13]
This does not appear to directly require or provide affordable housing, it seeks to address the efficient delivery of housing, particularly in high growth areas.
However, this has been an ongoing challenge in New Zealand, particularly around growth node or town centre intensifications in existing residential areas. Both Australia and New Zealand are reviewing legislation governing the building sector to increase efficiencies and lower costs.
Perhaps both countries can learn the same lessons from overseas. The provision of affordable housing can be improved by growing the third sector, and land use planning mechanisms are one tool to assist in accomplishing this. New Zealand has looked to Australian experience in constructing large, masterplanned developments and partnerships, and the Urban Development Authority model could similarly be applied in New Zealand.
In the United States, there is another system in play. Many cities specify planning targets for affordable housing of between 10 and 15 per cent. These provisions are supported by planning bonuses, such as density provisions, rather than direct funding. Mandatory inclusionary requirements are supported by federal and state tax incentives to stimulate investment in affordable housing. Examples include the Low Income Housing tax Credit programme, and HOPE VI.[14]
This has led to a very strong not-for-profit sector in the US. It has encouraged a very strong for-profit sector to develop coupled with the investment of private capital. Being able to engage the private sector allows for the investment of a large amount of money that would not otherwise be available. The key is to make the investment economically successful, and attractive to investors. In the article ‘Housing for All’ in Urban Land, John Stewart notes that in his mixed income developments, the most reliable tenants in terms of paying the rents and mortgages have been the people in the lowest income category rather than the market rate residents.[15]
With the lack of any direct government investment, the provision of affordable housing will undoubtedly have fallen alongside the collapse of the housing market in the US.
[13] http://www.claytonutz.com/areas_of_law/controller.asp?aolstring=54&na=1587
[14] Dr Gurran,G, Dr Milligan, V, Bugg, L-B, Assoc Prof Baker, D ‘International practice in planning for affordable housing: lessons for Australia’ AHURI Research and Policy Bulletin, Issue 105 July 2008
[15] Lockwood, C ‘Housing for All: A Discussion of Strategies for Bringing Affordable Housing and Social Equity to Metropolitan Areas’ Urban Land, Vol 65, No 5, May 2006
Nevertheless, the growth of a strong for-profit sector in New Zealand could add more ‘depth’ to the provision of affordable housing in this country.
Where to from here?
In his book ‘We Call It Home: a History of State Housing in New Zealand’ Ben Schrader identifies the negative public perception of state housing as one of the key challenges facing the provision of social, and by inference, affordable housing.
He argues that the evidence suggests it has less to do with the houses themselves than with the public perceptions about the people who live in them.[16]
He acknowledges several main reasons for the negative reporting; it distinguishes middle class culture from the poor (‘they are not like us’) and the ‘deserving’ and ‘undeserving’ poor; negative imagery is entertaining, and finally there is an element of truth.
Dealing with this issue is critical to the overall acceptance and success of affordable and social housing. Social and affordable housing does not make people poor, and the social issues that come with concentrations of high deprivation do not necessarily have a direct relationship to the tenure. As has been witnessed in New Zealand, if the underlying social issues are not addressed then HNZC exiting an area can actually make the housing stock and overall conditions worse.
Focusing on building communities is one way to deal with the stigma associated with social housing. As noted in Urban Land May 2006 “The affordable housing challenge is part of a larger set of social challenges that will be solved together or not be solved at all” [17]
In the past, getting a state house was an aspiration, or at the very least was considered to be a normal part of progressing up the housing ladder. With the recent commitment to affordable home ownership, perhaps owning a ‘state house’ can become aspirational again.
With the renewed focus on providing mixed communities, we can see the development of areas with a wider mix of housing tenures and social housing is accepted as part of the makeup of a sustainable community.
It is clear that delivering these communities will require both leadership from central and local government and significant investment.
We believe that New Zealand is well placed in this regard; the necessary frameworks and agencies are in place, and a large amount of research has been conducted in this area. The situation could be improved with a more guidance on the delivery of affordable housing at a national level, possibly by way of a national policy statement, and local councils could be more proactive. It is critical that politicians at all levels accept that the provision of mixed communities is positive for the country, and support its implementation.
The growth of the third sector, both for-profit and not-for-profit, appears to be the major challenge for providing affordable housing in New Zealand. There is a range of mechanisms that could be implemented.
The use of land-use planning instruments, such as s.106 has been successful in the United Kingdom and could be considered for inclusion within the RMA here. Direct investment or subsidy from the government into third sector groups could be also considered, as could transferring some stock to a third sector provider.
Growth of the for-profit sector could be one way of stimulating the house building market in the current environment. While prices have come down and interest rates are lower, there are still large affordability issues, and demand for houses.
At the same time developers are finding it increasingly difficult to access funding.
Little has been said of sustainability in this article, in our opinion the key measure is social sustainability; to create communities that take care of themselves and need minimal government intervention. These communities need a holistic approach to look at issues of affordability that go deeper than the cost of building and providing houses. They will ideally include a wider range of housing types and tenures, of which social and affordable housing is a part.
[16] Schrader, B. (2005) “We call it home – a history of state housing in New Zealand”, Reed Publishing
[17] Lockwood, C ‘Housing for All: A Discussion of Strategies for Bringing Affordable Housing and Social Equity to Metropolitan Areas’ Urban Land, Vol 65, No 5, May 2006