Positive Family Outcomes From Affordable Housing Development
March 25 2014
Positive Family Outcomes From Affordable Housing Developments
A ‘hand up’ approach to assist Kiwi families into new, affordable housing has proved a winning formula by delivering significant social and wellbeing benefits, according to research recently commissioned by the New Zealand Housing Foundation.
The Housing Foundation, with support from the Tindall Foundation, has pioneered a new era of affordable housing. It has combined with partners to assist working families on low incomes into new, quality homes and on the pathway to home ownership, through its affordable housing programmes (affordable equity and affordable rentals) which aim to grow strong, safe neighbourhood communities. An important aspect of this approach is ‘place-making’, the intentional development of healthy sustainable communities, beyond the mere provision of houses.
The key aim of the Foundation’s Affordable Planned Housing research project* was to determine whether planned, quality, affordable housing developments impact positively on a household’s wellbeing and quality of life. It used the Foundation’s Glen Eden development, completed three years ago, as a case study. In-depth interviews with resident households within and outside of the Foundation’s development were conducted.
Encouragingly, the Foundation found many long term, far reaching improvements to the lives and wellbeing of all the Glen Eden development residents interviewed.
Key changes included increased participation in community life; greatly improved health; less demand for healthcare services; a reduction in school absenteeism in families with school aged children and an increased sense of security, safety, community connectedness and overall wellbeing.
In terms of statistics, for example, 81% said
their sunny, well insulated and dry home is far more
effective at keeping winter and respiratory illnesses to a
minimum. More than 80% of residents also rated their quality
of life as extremely good or good in their present home,
compared with just 46% in their previous home. Residents
noted enhanced enjoyment of, and participation in community
life, as the biggest drivers to improving their quality of
life. Nearly two thirds of residents rated the community as
excellent or very good, an improvement from only 17% in
their previous residences.
Resident parents were also positive about their children’s achievement at school – 48% of children/young adults were rated as having improved their performance. One resident said, “(we’re) living in a nice warm house and the house is not over crowded. Everyone has their own space and the children are getting less coughs and colds, therefore are at school more, and learning better.”
CEO of the Housing Foundation, Brian Donnelly, says the research findings provide a better understanding of the distinct link between quality affordable housing and improved family and community wellbeing. He says benefits should not be measured solely in terms of “numbers of roofs” but also in terms of improved social wellbeing and the contributions these households bring to their community.
“Low income households with secure and stable housing tenures feel more connected to their communities. They take more pride and ownership within their neighbourhood and experience better well-being. In addition, their longer-term quality of life and enhanced financial wealth benefits are realised relatively quickly and are sustainable over the long haul.
“Our assistance to families is for as long as required and is designed to support their aspirations. Some can, over a very short time, become quite independent with significantly reduced levels of financial support required.”
Co-founder and trustee of the Tindall Foundation, Sir Stephen Tindall, says the Housing Foundation’s neighbourhood developments demonstrate how a strategic, long term investment approach can leverage better social outcomes. He says it is about enabling households to get ahead and invest in their future rather than having to rely on welfare support.
“This is the future and this is how we are going to break the poverty cycle. Affordable housing developments, created by community housing providers who are happy to work alongside developers and investors with shared values, are a tangible way of helping generations of New Zealand families to live healthy and happy lives and for our communities to be strong and prosperous.
“Learning financial literacy whilst developing a family legacy through home ownership can really transform a family’s outlook on life,” he says.
Current developments the Housing Foundation is engaged with include a 282-unit project at Weymouth in South Auckland, known as Waihamia Inlet. Another is currently underway in Hornby, Christchurch.
Brian Donnelly says the Waimahia Inlet development will feature improved details which reflect an increased understanding of residents’ needs, learned from this research. Each home will be architecturally designed to be warm and energy efficient, and will be built by experienced, registered builders to a high standard, focused on attention to detail.
“Waimahia Inlet is also unique in that 40% of the houses will be for sale on the open market. It presents an unparalleled opportunity for all first home buyers and families entering the housing market to purchase in a superb quality, new housing development at an affordable price.
“We want the Waimahia Inlet to feature a predominance of families in their very first, owned home. However, there will be many opportunities for other owner occupiers to settle down and enjoy this great location as well. We have also planned for a small number of rental houses to be built in stages for specialised community housing organisations such as Habitat for Humanity and Accessible Properties.”
Construction will be underway in May with 21 first homes available to move in to from August this year. The brand new, modern design homes are a mixture of two, three, four and five bedrooms.
First homes in the Hornby development should be available to move in to from August this year.
The Affordable Planned Housing research is significant as it provides evidence that affordable homeownership definitely and measurably affects a family’s wellbeing.
Both the Waimahia Inlet and Hornby affordable housing developments have drawn on this research and the documenting of the homeowner experiences, to ensure significantly more families can escape the ‘rental trap’ and move to experience the holistic benefits of affordable home ownership.
*Affordable Planned Housing: A Resident’s Perspective – December 2013 by City Scope Consultants in conjunction with Nexus Planning & Research
QUESTIONS AND ANSWERS
What do the results of the recent research tell us about the impact the Housing Foundation’s ‘placemaking’ housing development approach has on family wellbeing?
More than 80% of residents rated their quality of
life as extremely good or good in their present
home, compared with just 46% in their previous home.
Residents said their health had improved in their new homes. The majority (64%) rated their health as excellent or very good. Only 19% felt this to be true in their previous home.
81% said their new, well insulated, dry homes have helped prevent winter and respiratory illnesses
The location of the development, with nearby access to walkways and cycle ways, has increased residents’ opportunities to exercise, thereby improving overall health
Improved health has resulted in a reduction in absenteeism for families with school aged children and less demand for healthcare services. This, in turn, helps parents feel more positive about their children’s achievement at school.
Since moving in to the development, people’s lives have become less transient and people feel more secure.
How does the Foundation’s
“shared equity” scheme work?
Under the "affordable equity" model a household purchases a share of the home to a level they can afford (subject to certain conditions). They must have a deposit of $10,000 or more to be considered for an Affordable Equity programme. The remainder is owned by the Housing Foundation and both parties are represented on the property title. The household organises their own mortgage with the advantage, under this arrangement, that they have a mortgage they can afford but which enables them to purchase a significant equity share in the property on the open market.
See the example figures below for a typical 75% ownership share:
Purchase price of property at market value $400,000
Household buys their home with a mortgage plus their deposit $300,000 (75% of value)
Foundation contribution $100,000 (25% 0f value)
The Housing Foundation retains 25% passive ownership of the house. The Foundation’s ownership is the difference between the value of the home and the amount the household (shared owner) can afford. The householder's funds come from their deposit saved and the mortgage amount borrowed from the bank. In the above example, the Foundation's 25% ownership amount is $100,000.
How does the Reserve Bank’s minimum
20% mandatory deposit affect this?
The Reserve Bank Loan to Value Ratio does not apply to new houses.
What happens if a prospective home owner
does not have savings for a deposit or is unable to obtain a
Then our “rent to buy” scheme might be more appropriate for them. This is where people rent initially and then use part of the increased value of the house after five years towards a deposit to purchase the home.
Are banks lined up with special loan
packages and who guarantees the loan?
The bank negotiates directly with the household regarding the mortgage package. The Housing Foundation recommends a 25 year principle and interest mortgage repayment structure and is kept informed by the bank and household on the terms of the mortgage application. The loan is guaranteed by the household, the borrower, and is secured against the house. The Housing Foundation does not guarantee the loan.
How do you define a low income
Most households are working families on low incomes when they apply to the Housing Foundation. They are working households who can afford, with a mortgage and some assistance, to purchase a share in a new house. Household income is determined by the household size and makeup and circumstances such as debts, level of financial literacy etc. Generally gross-household income level is capped at $90,000, though this depends on the household size and its makeup.
How are people eligible for
assistance from the Foundation?
At least one member of the household must be a New Zealand resident or citizen and at least one member of the household must be an income earner. This must be their first home i.e. they cannot be a current home owner. They must be committed to owning their own home and aware that they won’t be able to afford to buy without some assistance. They must also be capable. With some assistance and support of obtaining a mortgage from one of the New Zealand banks which partners with the Housing Foundation and these products
does the Tindall Foundation support the Housing
The Housing Foundation was formed 11 years ago, with support from the Tindall Foundation who wanted to find ways to assist with affordable housing for New Zealand families in a way that built communities. The Housing Foundation grew into a new area of philanthropy for the Tindall Foundation with both social and business objectives – a true ‘Social Enterprise’. The Housing Foundation has received a combination of donations and loans from the Tindall Foundation, with a total loan facility which currently sits at approximately $4.3 million.
Can anyone purchase the homes for sale on
the open market at Waimahia Inlet and who are they able to
on sell to?
We have a significant number of Waimahia Inlet homes available to purchasers who intend to live in the home themselves i.e. as an owner occupier. When the time comes to sell and move on, there will be no covenants to restrict owners’ ability to sell in the open market.
How can you guarantee the quality of the
Waimahia homes you are offering?
Each home has been architecturally designed to be warm and energy efficient, and is built by experienced and registered builders who we have 100% confidence in, to an excellent standard.
What kind of price range will the
Waimahia homes be selling for?
The properties will have values of $325,000 to around $500,000 offering unparalleled value for money for living in a coastal environment with water views.
What role does the
Housing Foundation play as shared owner?
A passive role. We do not charge any interest or rent to the householder for our share of the dwelling. When the property is sold, both the householder and the Foundation get their share of any increase in the value of the property.
How often can households increase their share in a house?
On the anniversary of a purchase date they may make an application to us, to increase their share, in 5% blocks, up to a maximum of 85%. At this point their next share purchase must be the full purchase of the remaining 15% of the equity owned by the Housing Foundation. The property is revalued each time a home owner wishes to increase their equity to determine the cost of an increased share.
Is there a Body
Corporate fee in each development area?
No, but at Waimahia Inlet there will be a Residents’ Association. By purchasing in the development, residents agree when they purchase their house or a share in the house to become members of the Association and follow the Association guidelines for community living. There will be a yearly fee to belong to the to the Residents’ Association.
Are there covenants on the homes?
i.e. modifications; maintenance; quantity of
There will be covenants requiring households and property owners to keep their home, their gardens where they face the road, the shared access ways and facilities, maintained to a minimum agreed standard.
Who pays all the ‘outgoings’ for
each property and are these
Affordable equity households are responsible for all outgoings, including Council rates, house insurances and all service costs.
people apply for Affordable Equity and Affordable Rental
They can go to the Foundation’s website and complete the ‘Expression of interest’ which is the start of the application process. They can also phone the 0800 446 874 and speak to a housing advisor who will guide them through the process.