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Transfer / Sell

Transfer / Sell (Keep none)

This option would see all 377 units transferred (sold) to another entity within the social housing sector.

Council wants the housing to remain as affordable rental housing. The protection of tenants and the special character of the retirement villages is important and therefore any transfer contract would need to contain the following conditions:

  • Ensure existing tenancies, under the current (or better) terms and conditions, remain in place,
  • The portfolio can only ever (in perpetuity) be used to provide housing to retirement or community tenants, and
  • The Council retains the right of first refusal (on the same sale conditions) if the buyer was to sell the portfolio.

Because of this, a sale through the open market is not being considered.

The opportunities for redevelopment of the two villages we have identified and the potential to demolish and intensify other sites allow for additionality (adding more housing) which could allow Community Housing Providers to access government funding and is a key focus for Kāinga Ora. There may be an option to vest (give) the housing to a new regional or local housing trust should one be formed by council(s). Such a trust could become a Community Housing Provider and would operate entirely independently of council(s). This option would not result in any sale proceeds.

No particular ‘buyer’ has been identified as this would be subject to a sale process.

Pros

This option allows the housing to remain as affordable housing and in ‘community ownership’, noting that the majority of CHPs are charitable trusts.

Advantages of this option are mainly financial for both tenants and Council (ratepayers). CHPs provide wrap around support services in addition to tenancy management and are able to apply the IRRS discount rent rate (rent set at 25% of income) to new eligible tenants. Under a transfer to Kāinga Ora, all eligible tenants (existing and new) would be able to access the subsidised rent. Should the conditions be put in place, there would be no negative impact on current tenants. A full transfer would remove all liabilities (costs and deficits). Sale proceeds received (noting that transfer to a council formed regional or local housing trust would not provide any sale proceeds) would be available for any of the following, in consultation with the community:

  • Repay debt
  • Invest to generate income
  • Pay for current / future loan funded projects
  • Implement new or deferred projects

All of the above have a positive impact for the ratepayer.

Cons

  • While any sale agreement would provide protections for current tenants, a change of ownership could create anxieties for tenants.
  • The transfer of ownership option, once entered into, is irreversible (apart from a future buy-back), and would see the loss of Council ownership of the housing and the land.  Removing this activity from Council may compromise our position should opportunities arise through Local Government reforms or any future government change of policy (that might provide support for Council housing).
  • The market value of the portfolio sits at $65 million. However, the transfer options that best align with Council’s criteria (selling to a CHP) and with the conditions outlined above would attract a lower price than a market value. In the case of transferring to a council formed trust, there would be no sale proceeds.
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Consultation Timeline

Consultation Opens

16 March 2022

Submissions Close

20 April 2022

Council Hearings

18 May 2022

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