Govt support gamechanger for community housing finance agency

Thursday, 27 March 2025

New Zealand needs to build more social housing, and the Community Housing Finance Agency aims to help fund it.

Thousands more social homes are likely on the way after the Government committed its support to an agency that provides finance to community housing providers.

The Community Housing Funding Agency offers privately guaranteed bonds to New Zealand investors who want their money to go to the “social good” of building new housing for those who need it.

The bonds unlock lower-cost finance for community housing providers (CHPs) to enable them to deliver homes at scale.

But the agency, which launched in November, has been a privately managed social enterprise funded by charities, philanthropists and fund managers, and the Government did not play a role in it ‒ until now.

Housing Minister Chris Bishop said on Thursday that the Government is establishing Crown lending facilities of up to $150 million for the agency.

Housing Minister Chris Bishop says the Government is establishing Crown lending facilities of up to $150 million for the agency.

The Government believed in social housing, and wanted to put CHPs on a more level playing field with Kāinga Ora, he said.

“We are working hard to deliver better housing to those who need support, including by assisting the CHP sector to expand and grow.”

To that end, the Government would provide the agency with an interim lending facility to support immediate financing needs, and have a final liquidity facility up and running later this year, he said.

“This will lay the foundation for the agency to borrow hundreds of millions or billions of dollars, supporting not just the delivery of social housing, but also CHPs’ broader affordable housing portfolios.”

Bishop said the Government was also exploring the appetite of banks to participate in a loan guarantee scheme for CHPs, similar to previous initiatives like the Business Finance Guarantee Scheme.

“A loan guarantee scheme is where the Government takes on some proportion of the loan’s default risk, meaning lenders won’t need to hold as much capital to cover the debt and can use the capital elsewhere.”

That scheme should encourage greater participation by banks in the sector and enable them to pass on meaningfully reduced interest rates and other lending accommodations to CHPs, he said.

“If banks see merit in a CHP loan guarantee scheme, the Minister of Finance will finalise its design and work towards a go-live date later this year.

The Government’s support for the agency is a watershed moment, Community Finance’s James Palmer says.

“Together, these two initiatives will increase the scale at which CHPs can access lower cost debt financing, enabling them to grow.”

Currently, CHPs account for 16%, or about 13,000 houses, of the country’s social homes. Last year’s Budget provided funding for an additional 1500 social houses, 1000 of which will be delivered by CHPs from June.

James Palmer is chief executive of Community Finance, which manages the agency. He said the Government’s support was a watershed moment for the agency, and community housing in New Zealand.

“It provides our country with the platform to deliver new affordable homes at scale, helping to address chronic affordable housing shortages nationwide, with less cost to taxpayers and less government debt.”

The international norm is for community housing to be delivered at scale by charities with the support of finance through a specialist financial intermediary that has government support, he said.

“From today, we are no longer the international outlier, and we are excited at what this will be able to deliver for New Zealanders.”

The likes of Generate KiwiSaver, Westpac KiwiSaver Scheme, Harbour Asset Management, Pathfinder, and Simplicity have helped underwrite this lending so far.

Ka Puta Ka Ora Emerge Aotearoa is one of the CHPs that has partnered with the agency to build social homes.

CHPs signed up to access finance through the agency include Visionwest, Dwell Housing Trust, Monte Cecilia Housing Trust, The Salvation Army, CORT Community Housing, and Ōtautahi Community Housing Trust.

Palmer said Kiwis investing in Kiwis was critical for the country to address social inequality and help solve its infrastructure deficit.

“With over $300 billion in funds under management domestically, we have the money we need to solve this problem.”

“We look forward to more KiwiSaver providers and fund managers becoming investors in CHFA bonds, following this announcement of government support.”

When the agency launched it was able to provide up to $500m of finance for CHPs who met the standards, but Palmer said at the time that with government backing long term it could raise billions.

Simplicity managing director Sam Stubbs said the announcement was a big deal, and would be a gamechanger for community housing.

“CHPs are a proven way to get more of the affordable housing our communities need across the country, and the agency is a great way to help unlock billions of dollars of KiwiSaver money to invest in affordable housing.”

Government support of the agency was critical in getting the financial markets involved at the scale the country needed, he said.

“It’s similar to Local Government Funding Agency, which has worked magnificently for local authorities, and with government support the CHFA will do the same for community housing.”

He pointed to Australia’s independent national housing agency, Housing Australia, as an example of what could be achieved.

Launched in 2019, it has approved more than $4b of loans to CHPs in Australia and saved an estimated $750m in interest savings compared to bank rates, while providing finance to deliver thousands of new homes.

Stubbs said it would turn the trickle of money from KiwiSaver funds going into housing to first a stream and then a river, and that was what Michael Cullen would have wanted with KiwiSaver.