Wellington councillor hopes to delay spending on social housing
Monday, 17 March 2025
The Wellington City Council is planning to spend at least $245,000 for every social housing unit over the next 10 years, leading councillor Ray Chung to say “there’s got to be a better way”.
The council provides close to 1800 units across the city, according to February figures, and has budgeted $437 million for social housing upgrades in its long-term plan.
Councillor Tim Brown said many units had been already upgraded by the Government and were in adequate state.
“Obviously a lot of the units are in perfectly OK shape, and they've already been upgraded … so it doesn't quite work out to be like that.”
Upgrades include work like seismic strengthening, insulation, ventilation, fencing, lighting and upgrades of kitchens, storage and laundry facilities.
A business case will be provided to the council in April with clearer detail of exactly what needed to be done, so the current forecasts were subject to change.
The budget included the six housing complexes that were declared quake-prone one month ago.
The council is legally obligated to provide social housing to a good standard for at least 30 years under the “Deed of Grant” agreement made in 2008 between the council and the Government ‒ meaning even if the council wanted to, it cannot sell its housing.
For the first half of the agreement, or Housing Upgrade Programme 1 (HUP1), the Government invested in housing upgrades. Now in the second stage, HUP2, the council is continuing the work. If council breaches the agreement, it is required to pay back the $220m the Government funded for the first half of the portfolio upgrades.
But where the Government spent $220m on upgrades during the HUP1 programme, the council’s HUP2 programme is almost double that. Brown believed the Government money was used to do some of the easier remediation work, and was done in an environment where construction costs were lower.
“There's been a huge jump in construction costs over the last five years which has caused pretty much all the council's problems.”
During the long-term plan amendment last year, council staff recommended all social housing upgrades be pushed out eight years as the council looked to tighten its belt.
That would save $61.3m, but the idea was rejected. At the time councillors said it would impact the quality of tenants’ homes and inflate costs over time.
In 2023, the council leased 1786 units properties in its portfolio to community housing provider Te Toi Mahana, after they were found to be losing $30,000 a day. The council still owns the property portfolio but Te Toi Mahana operates it.
In its establishment, the Government agreed to provide Te Toi Mahana with income-related rental subsidies (IRRS), which sets rent at 25% of a tenant’s income with the Government topping up the rest.
The operating subsidy both reduces the rent for eligible tenants and funds the trust at market rent levels, which improves its financial position.
As part of the deal, the council gifted $10m worth of properties and $23m to increase the supply of social housing.
In a meeting this week which will confirm the long-term plan, councillor Ray Chung is planning to put through an amendment to delay certain projects, including social housing, for a year to find savings.
Chung said he was “shocked” when he first saw how much was budgeted.
“I’m not saying we don’t need social housing but there’s got to be a better way.”
Rebecca Matthews said the council needed to “crack on” with the upgrade programme.
“We need to work very smart at the moment with the constraints that we have, but housing is a real focus for me, I wouldn't support any cuts to anything.”
Correction: An earlier version of this story incorrectly said the budget did not include the complexes that were declared quake-prone. (Amended March 17 2025, 12.35pm)