The way forward for Social Housing Areas in Hamilton

Aug 3, 2017

To view this speech scroll to 2:25:40 on the following youtube link:

Madam Chairperson, your worship, councillors thank you for the opportunity to speak today about something that we at Habitat hold very close to our hearts that being the issue of affordable housing especially here in Hamilton city where we have been active and involved in housing for over 20 years.

I am Nic Greene, general manager of Habitat for Humanity Central North Island. I know many of you are aware of Habitat and have in fact been supporters of our work over many years we thank you for that support. For those of you who don’t know us we have come a long way from our roots as solely an affordable home ownership entity and now have wide ranging activities including social rental properties, pensioner housing, a home repair programme that partners with the District Health board as well as or flagship ownership activity. I would welcome the opportunity to talk with any of you who want to know more outside of this presentation.

To start I would like to congratulate council in drafting and consulting on this very important policy We endorse the need for special housing areas (SHA) in Hamilton to help address affordability by facilitating an increase in land and housing supply. We recognise the role of the private market and that increased supply will go a long way to easing some of the pain that is being felt by some of our vulnerable citizens. We must also accept as the United Nations has in its Universal Declaration on Human Rights that housing is a right of our population. It is also the role of council to represent the best interests of Hamilton City and access to affordable housing is one of your 10 priorities in the Hamilton Plan vision statement.

Current planning rules have very obviously limited the growth of affordable housing. Hamilton is not alone here, this was a key finding of the productivity commission report into housing affordability.

The report found that “There is no need for our homes to be expensive – we can construct quality, affordable homes. But, it will take councils and developers to work together so that sections can come to market quickly at a price that allows the building of homes at an affordable price”.

Councils should also ensure they aren’t putting up barriers to development and should take a less constrained approach to urban planning. “

Perversely it seems that planning restrictions have encouraged higher cost housing as developers are driven to produce properties with higher margins. Your consent data indicates you are on target for housing number outcomes but the mix is unbalanced as it does not contain many lower cost family homes. Special housing areas need to be special, the current draft policy reference to and compliance with the district plan fails to allow a fast track.

We recognise and support individuals including developers right to make money, to do well, but we also think there is a responsibility to do good. Where the market is not doing so then there is a role for council to put in place mechanisms to encourage such, because of this we strongly support the inclusion of affordability criteria in the Special Housing Area policy.

I was concerned by reference in the policy and its associated documents to relative affordability. There is a need to establish affordability in real terms not just make one part of a development slightly cheaper than the rest but still remaining out of reach to all but the wealthy or heavily indebted.

At Habitat, we work on affordability guidelines of 30% of gross income or house prices at five times median house price. In both cases Hamilton is already classed as unaffordable. To put this into context a family with two working adults doing 80 hours per week on minimum wage could only affordably buy a home of $310,000. At present, there are only nine three-bedroom houses in all of Hamilton listed for less than 350k. For a single income family the situation is much worse. There is just no supply of lower cost houses, the flow on effect being a limited supply of affordable rental properties as well.

As such the affordability criteria in the policy needs to be addressed. Mandating two-bedroom 150m2 houses is not a pathway to affordability, we believe the size should be reduced further to 130m2 and the reference to number of rooms removed. If we are to increase the supply of affordable well designed homes then we need a range of properties suitable for a cross section of the population at lower price points.

At Habitat we routinely build four-bedroom 110m2 homes with no garages, these starter homes are well suited to families and we have significant evidence of such. I would bet most of us either owned or grew up in much smaller, more basic homes than the 200m2+ properties we are producing today. All the spec house builders have smaller homes on their books but they tell us there is no demand. We would argue that those who want them can’t afford them and those that can afford them don’t want them, or to have them in their neighbourhoods. Because of this special housing areas should also restrict the types of covenants that make smaller houses impossible to build in new subdivisions.

It would be fair to say that most developers have a limited appetite to work with lower income families. That is not their role but there is an entire sector that is willing and prepared to do so. The development of the Hamilton Housing Plan by the sector, in consultation with the HCC, demonstrated this willingness. Unfortunately, at the time the council saw no connection between the private development sector, its planning processes and social housing providers. While access to affordable housing is listed as one of HCC priorities there is no policy I could find on how we are to approach affordability, it is instead imbedded in other documents such as the Growth Indicator Report. This report makes passing mention of a decrease in affordability but that we are still better than the other major North Island cities – not a great claim to fame. I believe it is time to dust that off the Hamilton Housing Plan or an equivalent and join the dots.

Within the policy there is distinction made between pure developer driven SHA and those involving a Community Housing Provider (CHP). There is some argument that these are double standards, which is probably true but Murray Sherwin of chair of the productivity commission said “the social housing sector will need considerable assistance if it is to scale up to the extent required, and do so within a reasonably short timeframe” Central Government is doing some work in this area but it also falls to council to help. We endorse this distinction but believe the threshold needs to be tweaked. If the intent of the policy is to create more affordable housing then a threshold minimum of 50 sites for developers would encourages larger scale development while the 20% affordability requirement would deliver 10 affordable homes. Where the benefits of fast tracking are sufficiently attractive then such numbers could be made to work.

For smaller developments involving a CHP whose sole purpose is to produce affordable homes the removal of such limits is warranted. This also allows for smaller infill type developments to proceed on a case by case basis, Habitat currently has several sites within Hamilton City that with a change of designation could be developed to provide two to three times the current number of homes.

Finally, there is a need to address the mechanism by which SHA are bought to council and assessed. The draft policy suggests council will call for applications but makes no commitment to regularity or timeframe. We believe to be agile there needs to be a more open avenue for SHA opportunities to be raised and assessed at any time. The draft policy also front loads all the proposal costs onto the developer and creates an extended and uncertain pathway to approval. A more balanced partnership approach whereby council commit to a proposal and absorb its own costs in bringing it to fruition at an early stage would provide comfort to the sector.

There is also a question of infrastructure costs but I defer to the property council’s submission given their much greater experience in this area other than to say that council has access to funding that is not available to other stakeholders, the Central Government infrastructure funding for Peacokes is a good example of this.

Habitat for Humanity remains enthusiastic and ready to work with council and the development community to create simple decent housing to those in our community who fall outside what the market alone can deliver.