Simplicity KiwiSaver to build 10,000 affordable, long-term rentals in the next 10 years for $450k each

Friday, 18 February 2022

New partnership between Simplicity KiwiSaver fund and developer aims to add 10,000 affordable, quality homes to the long-term rental market. First published May 2022.

Simplicity KiwiSaver is funding apartment “villages” in Auckland's Point England with each two- and three-bedroom home costing an average of $450,000 to build.

That is less than half the price of the 300 homes in Arlington, Wellington, which Kainga Ora announced on Thursday that it planned to build at a cost of $296 million, or just short of $1m each.

The apartment villages in Point England are the result of a deal under which not-for-profit KiwiSaver provider Simplicity has bought the business, IP and expertise of developer NZ Living and transferred into a new venture called Simplicity Living, owned by Simplicity.

Simplicity chief executive Sam Stubbs said NZ Living owners Shane and Anna Brealey could have sold their business for more than $100 million.

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Shane Brealey of NZ Living effectively gave away his company in order for thousands of affordable rentals built to house families in warm, dry homes at fair rents.

Instead, the Brealey’s struck the deal with Simplicity so the KiwiSaver providers’ access to funding would enable the building of 10,000 affordable, long-term rentals in the next 10 years.

Sam Stubbs, chief executive of Simplicity, at a site in Point England, Auckland, where hundreds of high-quality, durable, attractive apartments are being built at a cost of around $450,000 each, including the land they stand on.

“They are some of the greatest philanthropists of New Zealand that you would never know,” Stubbs said.

“This is a massive give-back to the country,” he said.

NZ Living's efficient building method is fast, low-wates, and does not even involve cranes.

Simplicity KiwiSaver funds will own the villages the partnership builds, all built on the same plan as the Point England villages.

The apartments would be made of concrete and brick to last at least 100 years, far longer than to the 50-year standard most New Zealand homes were built to, Stubbs said.

They would also be built to a high-level of thermal efficiency so that residents barely had to heat them, even in winter, he said.

The Brealeys will manage the developments for at least the next five year.

Brealey said each apartment village took the equivalent of two-and-a-half-days per apartment to build.

The speed at which the apartments went up was part of the key to their low cost, which included the cost of land, he said. “It takes about 10-and-a-half weeks from ground slab to topping off.”

NZ Living’s low maintenance concrete and brick construction technique for building three-storey apartment blocks did not involve cranes, he said.

And it produces only a quarter of the waste of traditional building techniques, he said.

Renderings of the planned Kainga Ora Arlington Development in Mount Cook, Wellington.

The model did not involve cramming apartments onto sites, with a third of the land covered set aside for communal gardens and shared space, to give children places to play, and families places to spend time out of doors.

“It's cheaper, and faster, and better. It ticks all three boxes, and yet the industry does not do it. I’ve tried to give this IP away,” Brealey said.

Near Maungarei Mount Wellington, construction of the Simplicity KiwiSaver-funded apartment villages centre around the stairwells. The homes are designed to be low-maintenance, thermally efficient, and last for over 100 years. Unlike many apartments, living rooms and bedrooms are designed to have windows on two walls for light and airflow.

“I thought, ‘what’s the point in having all this technical ability, and so on. We’ll team up with Sam and crew, and do it all in a not-for-profit basis to create 100-year plus product, so churn through family after family after family, help them with a discounted rental to save,” Brealey said

Simplicity and the Brealeys were introduced by venture philanthropist Sir Stephen Tindall, the founder of The Warehouse.

Brealy said he and his wife had done well out of the building industry, and their grown-up children were all independent, and his deal with Simplicity was their way of giving something back to the country.

The aim for Simplicity Living was not to develop homes to sell, but for Simplicity KiwiSaver funds to become long-term owners of apartments for rent under the Simplicity brand, Stubbs said.

These would produce income, and capital gains, for Simplicity’s KiwiSaver investors.

Stubbs said Simplicity Living homes would provide long-term, affordable rentals to families, and individuals.

“We want people to enjoy living in them. We don’t want them turning over every one or two years. That's crazy. You just get a healthy relationship of trust over time. That's what happens in the UK, Spain, Germany and France,” Stubbs said.

“The model doesn’t exist in New Zealand, but it does overseas. There’s not a single new idea here,” he said.

In time, it would look at providing people with occupation rights, which could prove attractive for people seeking an alternative to a retirement village later in life.

Brealey and Stubbs also hoped Simplicity Living could teach New Zealand how to build liveable homes at sensible prices.

“It's a very simple repeatable, which means there are economies of scale, which means these things will cost less to build, Stubbs said.

Simplicity was offsetting the construction through native tree-planting, said Stubbs, though Brealey said the longevity of the buildings, combined with their low maintenance and heating needs, results in good environment credentials for the buildings’ entire life cycle.