State Housing Action Incorporated

7 December 2016

Media release:

Judicial review over proposed sale of Tauranga HNZ properties

On 9 November 2016 Justice Simon France of the High Court delivered his decision on the Judicial Review proceedings brought by State Housing Action Incorporated against the Ministers of Housing and Finance with regard to the proposed sale of virtually all of the Housing NZ houses in Tauranga.

Unfortunately, the application was denied and the decision of the Ministers upheld.

One of the key reasons for the decision is that the High Court Judge rejected the argument that the Ministers should have considered whether the transfer of the properties would have solved or even improved the chronic shortage of social housing in Tauranga. In the end, the High Court Judge considered that the Ministers did not have to weigh up this issue.

SHA is currently considering legal advice as to whether or not the High Court Judge was legally correct in this aspect of the decision. We will decide whether or not to appeal the decision by early next year.

However, at this stage from a wider public policy perspective SHA wishes to emphasise that the information obtained during the course of proceedings clearly indicated that the transfer will detrimentally affect the ability of the government to provide for Tauranga’s state housing needs in the future.

In this regard, the information revealed that IHC, through its subsidiary Accessible Properties, as the successful tenderer, will be allowed to carry out an intensive redevelopment of the HNZ houses for its own benefit. For example, if it demolishes a house on a large section and builds four town houses on it then three other properties will be released from having to be provided for social housing and Accessible Properties can do what they like with them.

The sum of the result is that future redevelopments of properties by Accessible Properties will not increase the amount of social housing in Tauranga. This can be contrasted with the current objectives of HNZ in Auckland where they intend to leverage on the existing stock of HNZ property by having more intensive development and increasing the number of social housing units available. This has been identified as a key way in which HNZ can realistically ramp up social housing’s plight and meet increasing demand.

Under the proposed transfer to Accessible Properties this will not be an option in Tauranga and the chronic shortage of social housing in the city will continue well into the future.

This clear detriment to social housing in Tauranga has in our view not come with any discernible other improvements and delivery by Accessible Properties. For all intents and purposes they will slot into the same role as HNZ in being a landlord providing social housing for MSD.

There will also be the additional risks of the yet to be formed company to be nominated by Accessible Properties to own the Tauranga state houses (despite the fact that the government had announced that Accessible Properties themselves would own the properties) financially failing and having the properties sold up in a mortgagee sale. They have also put at risk the effective second mortgage which the government has invested in the properties so that full purchase prices did not have to be paid at the point of sale.

All in all SHA considers that the transaction is an exercise in implementing free market ideology irrespective of the clear social detriments and the serious financial risks.

Irrespective of the court case outcome SHA Inc will continue to fight the proposed sale of thousands more state houses across the country.

John Minto
Convenor
SHA Inc

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