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Corporation improves utilisation of state houses

20 October 2006 Media Statement

Corporation significantly improves utilisation of state houses

A project to improve the way state houses are used has delivered efficiency gains worth an estimated $282m in the past year, Housing Minister Chris Carter announced today.

Among the gains is some $242m in freed up housing capital from successfully encouraging tenants paying market rents out of state housing and into the private sector.

"With more than 11,700 people on the waiting list for state housing we need to be using state houses in the most efficient way we reasonably can," Mr Carter said today.

"When the Labour-Progressive government came to power in 1999, we faced a crisis in state housing because of the huge number of homes sold off in the 1990s. We've bought that crisis under control by acquiring more than 5000 homes to meet demand, and funding an ongoing building programme. As a result, Housing New Zealand now has more opportunity to improve the utilisation of houses.

"The two biggest difficulties we face in improving utilisation are encouraging tenants in to smaller homes when their households reduce in size, and encouraging tenants who improve their income to shift into private sector housing creating space for people on the waiting list. Housing New Zealand has been working vigorously on both issues.

"I am delighted to announce that new figures show last year the Corporation made 410 transfers of tenants in under-occupied properties, resulting in an efficiency gain equivalent to 164 three-bedroom houses worth around $49.2m," Mr Carter said.

"In addition to this, 865 market rent tenants left state housing, largely due to encouragement from the Corporation's tenancy managers, who promote the benefits of home ownership and the opportunities in the private rental market. About 108 of these tenants moved directly from state housing in to homeownership.

"Encouraging tenants who have improved their circumstances to move in to more appropriate housing is a delicate task because an overly punitive approach could have unintended consequences," Mr Carter said.

"If the Corporation evicted a tenant once they reached a certain income level, it would create a disincentive for people in state housing to succeed. The government has refused to do this. Instead we have opted to work with the tenant, and these new results demonstrate the approach is working. The number of market rent tenants in state housing is now steadily declining.

"To ensure continued progress, I have asked Housing New Zealand to explore further ways of fine-tuning better utilisation initiatives," Mr Carter said.

Key Facts:

- Housing New Zealand manages more than 65,000 tenancies
- There are believed to be 1,578 long-term under occupiers in state houses left, many of whom are elderly. This equates to 2.4 percent of tenancies.
- There are now 5,960 tenancies on market rents left in state housing. Of these, about 1778 are long-term market renters, about 2.8 per cent of total tenancies.

ENDS

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