Whanganui’s Pensioner Housing Plan Takes Next Steps

Tuesday, 18 February 2025, 9:59 pm
Article: Moana Ellis - Local Democracy Reporter

A Whanganui District Council committee has received the final draft of a case for a new social housing entity.

Whanganui has an ageing population and faces growing challenges in housing supply and affordability, a report presented to the committee said.

A business case seeks approval to undertake the next steps for a joint venture partnership that would take over, manage and grow the council’s housing portfolio for older people.

Responding to population growth and rising housing costs, the council has adopted a high growth model for its Long-Term Plan (2024-34) and wants to see 1000 new homes built in the next 10 years.

It called last year for a business case to be developed on the concept of establishing a social housing entity that would “be the vehicle for growth” of housing stock in Whanganui.

The final report was presented to the council’s strategy and policy committee by KPMG on Tuesday.

The preferred option is to establish a standalone entity with partners.

KPMG’s Joey Shannon told the committee this would provide both expertise and access to finance.

He said a partnership or joint venture option would require the council to find an investment development and management partner who could contribute capital and expertise in building social housing and managing tenancies.

There was potential to include other councils in the model, now or in the future, to provide economy of scale and development opportunity.

Shannon said the joint venture would not require financial investment from the council at this point.

A backup option would be for the council to establish its own Community Housing Provider (CHP) as a standalone entity.

However, the report warned that a council-enabled housing entity was, on its own, unlikely to address affordable housing challenges in Whanganui.

After an extended period of low population growth and relatively stable housing costs, Whanganui now faced growing challenges in housing supply and affordability, the report said.

“There is an ageing population with increasing demand for affordable housing.

“Demand for social housing is high with 279 applicants in Whanganui eligible and ready to be matched to a suitable social housing property.”

The council began housing older residents in the late 1940s to alleviate an acute housing problem. Since then, the council has owned and operated affordable housing for older residents with low to moderate financial means, allowing them to live independently.

The council currently manages a portfolio of 275 units in 16 complexes.

Many were dated, cold and damp.

“Many have steps and strip / slip hazards unsuitable for older persons. A majority of the complexes require full roof replacements as well as other overdue maintenance items, requiring extensive capital expenditure to bring the existing units up to modern standards.”

The portfolio is currently expected to generate $2.1m in annual revenue and produce a small surplus.

Any growth would need to be financed through borrowing.

The report said new development could generate additional revenue if more dwellings are built, but additional debt required would be many times larger than the increase in revenue.

A bigger constraint would be revenue to service any borrowing.

Revenue generated from rents under the current model covered operational costs and a low level of renewal, but generated little to no surplus to cover interest costs or pay down debt.

The report said the land comprising the Older Persons Housing Portfolio was underutilised.

With 59,623 square metres of land under the portfolio, only 19% of land area is currently developed, presenting significant opportunity for redevelopment at higher densities.

Increasing density to 35% across the portfolio could generate a potential addition of 143 units.

But the report said as no new housing had been developed by the council in decades, there was no housing development capability within the council.

“Even if the financial barriers under the current model were addressed, for example through debt funding and rates subsidies, the council would be poorly positioned to maximise value from the sites through capitalising on opportunities for outside investment or other tenancies beyond older persons housing.”

A new housing entity would be tasked with improving the supply of affordable housing in the Whanganui region through a wider range of tenancies and ownership models while maintaining affordability and social outcomes for existing and future housing occupants, the report said.

Councillor Peter Oskam questioned whether council should be involved in social housing and asked for the question to be included for public consultation.

Deputy Mayor Helen Craig described the housing portfolio as “special and precious”.

“I’m thankful that we have it because enables many in our community of limited means to have safe housing.”

But she was concerned that the portfolio would build a deficit because income would not keep pace with repairs and maintenance.

“My preference is that we ensure the portfolio continues to stay at zero impact on rates and doesn’t increase the deficit. That would mean an increase in rents but we have got to keep this viable.”

The committee received the report, noting that the proposal would be included in the council’s Annual Plan community consultation process before any decision is made.

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