Simplicity becomes latest KiwiSaver to invest in social housing

Monday, 22 March 2021

The first tranche of units in a new 90-home community housing project developed by Ōtautahi Community Housing Trust in Christchurch are ready to open. (First published January 2021)

Simplicity has followed ANZ, Generate and Caresaver by investing KiwiSaver capital in social housing bonds.

With investors wanting to see their retirement savings making a social, as well as a financial return, an increasing number of KiwiSaver providers are backing the Community Finance scheme, which seeks to raise $100 million to build new affordable and social housing.

KiwiSaver provider Simplicity has committed $20m to the scheme, following investments from ANZ, Generate and Caresaver.

The KiwiSaver providers will earn a return for their investors by investing in community finance bonds, with their money being used to fund the development of affordable, and social housing.

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Simplicity chief executive Sam Stubbs said: “We believe safe, secure housing is a human right.

“We can get Kiwis into safe, secure homes, while making good returns for our members. Who wouldn’t want that?”

Simplicity’s KiwiSaver investors would get a financial return of between 2 and 2.5 per cent a year on the community finance bonds, which was about twice what the scheme would have got from depositing the money with the big banks.

“You can make money and do good,” said Stubbs.

KiwiSaver funds were becoming a major source of investment funding as workers and their employers contributed money from their pay packets.

“KiwiSaver fund managers alone should have $200 billion by 2030,” Stubbs said.

“The capability to build warm, dry, quality homes at scale is easily affordable for these organisations. If they had just five per cent of their funds in rental housing, we could already have 15,000 extra homes for rent.”

The bond scheme, The Aotearoa Pledge, is being run by Community Finance which works to raise private and philanthropic capital for social and affordable housing built by community housing providers.

One of the organisation’s directors, economist Shamubeel Eaqub, said The Aotearoa Pledge directed the power of finance to the worsening housing crisis.

“The housing crisis is too big to be solved by philanthropic funds alone – when we can unleash the investments of ordinary New Zealanders to benefit the housing of New Zealanders, we can move the dial,” he said.