Council’s share of social housing plan jumps to $439.5m

Tuesday, 8 April 2025

The Wellington City Council has laid bare its social housing plan as part of its two-stage deal with the Government to provide safe and secure housing.

The business case lays out the extent of the work that needs to be done, which is budgeted at $439.5 million, nearly double the $220m the government paid in the first half of the deal.

Council staff describe this as a “considerable jump” in terms of footprint and density to the work carried out by the government.

The council is legally obligated to provide social housing to a good standard for at least 30 years under the “Deed of Grant” agreement settled in 2008 between the council and the Government.

Under the grant the council must provide safe, secure and affordable housing, ring-fence all rental income from social housing for reinvestment in social housing and maintain approximately the same number of units.

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.

But where the government upgraded 11 projects on 11 sites, the council plans to upgrade 52 projects on 213 sites, should councillors vote on the preferred option next Thursday. The average cost per unit would be $374,000, and $133,000 per bed.

Councillor Tim Brown said the Government’s money had paid for the easier work but costs had now risen.

Other than the cost to ratepayers the next issue was the cost to tenants. Rents would rise to reflect the upgrades, he said.

Upgrades include work such as seismic strengthening, insulation, ventilation, fencing, lighting and upgrades of kitchens, storage and laundry facilities.

The preferred option includes an upgrade of 825 housing units, primarily through refurbishment, one new multi-unit development, one infill development and seismic remediation for nine earthquake-prone buildings.

Other options include upgrading all existing sites, choosing the lowest conforming cost, choosing projects selected on the greatest tenant benefits per bed or doing nothing.

But council documents state there is no true “do nothing” option, as much of the portfolio suffers from significant deferred maintenance and would affect residents’ quality of living.

“If left unaddressed, the building fabric will continue to deteriorate, potentially increasing costs from unscheduled repairs and broadening the repair scope,” the documents say.

Given the council’s legal obligations to fulfil the grant, should the council choose to do nothing, it would be $220m in debt to the government.

At a briefing on Tuesday, councillor Sarah Free questioned why the council would not pursue the lowest conforming cost option as its preferred option but staff replied that to do that would mean using 200 units.

To do the maximum amount of work is also an option, costing ratepayers $1.407b, though this is theoretical given the state of the council’s finances.

The time line for the work includes upgrading vacant standalone sites from 2024 to 2026, focusing investment on two sites from 2025 to 2029, upgrading the remaining sites from 2026 to 2034, seismically upgrading three HUP1 properties from 2026 to 2034 and divesting properties from 2032 to 2034.

Included in the business case is the Granville Flats, which is currently underway in its demolition and is to be handed back to the Tenth Trust.