Two social housing builds under threat

Two Kāinga Ora [KO] social housing developments earmarked for Wairarapa now have question marks hovering over them after a recent review found that the government social housing provider is “underperforming” and “not financially viable”.

The developments at East St in Greytown and Woodward St in Featherston are in the early planning stages and, according to KO Wellington regional director Vicky McLaren, “are currently under assessment while we work through decisions about our future social housing pipeline”.

KO is a “large and important entity”, Housing Minister Chris Bishop has noted, with $45 billion of assets, over $2.5 billion of expenditure each year, and 70,000 homes in its portfolio, making it the country’s largest landlord.

Bishop said that the solution to KO’s mismanagement is four directives agreed to by Cabinet – to align its contractual arrangements, refresh its board, issue it with simplified directions, and have ministers set an expectation that the board will develop a detailed and credible plan to improve financial performance with a goal of eliminating losses.

In addition to the two projects that are under threat, four further developments are underway on Fitzherbert St in Featherston, High St in Carterton, and Masterton’s Worksop and Makoura roads that are currently under conditional contracts.          

“Where we have existing contracts with private developers to buy their homes for social housing, we will proceed,” McLaren said.

Because of the conditional contact, KO could not disclose the cost of these developments.

The social housing provider returned to the region in late 2022 after a 24-year absence and has since provided 60 social houses, taking 62 people off the social housing register.

The first four new KO social housing sites, all in Masterton, were at George St [$8,750,000 for 12 homes]; Michael St [$2,040,000 for three homes]; Market St [$4,830,000 for eight homes]; and Irons St North [$8,630,000 for 14 homes].

More recently, KO finished a build on Masterton’s Kuripuni St that provided six homes for a cost of $4,194,000, a seven-unit build on Oxford St in Masterton that cost $5,000,002, and an eight-unit build on High St in Masterton that cost $4,760,000.

The total KO social housing spend in Wairarapa for completed builds has been $38,200,002.

“All KO acquisitions follow a robust due diligence process, which includes an independent market valuation,” McLaren said.

“This process also includes an initial negotiation stage during which KO assesses various aspects of the proposed project, including design and cost.

“For these recently acquired developments, each development is bought as a whole, including land, and all of these completed developments were done on time and within budget.”

Acquired developments involve KO contracting a private developer to manage the entirety of the planning, build, internal fit-out, and signoff, which McLaren said is one way to expand the housing supply to meet demand.

In addition to KO, Wairarapa also has Trust House [TH], which has provided social housing in the region since 1999.

TH has recently filled a social housing development in Kuripuni St that was completed last year but sat empty for months while the Ministry of Housing and Urban Development approved an income-related rent subsidy scheme; it also has a build under construction on Ōpaki Rd in Masterton.

The most recent Ministry of Social Development housing register figures show 192 people in Wairarapa are in need of social housing.