The Government has announced it support for the introduction of a new loan guarantee scheme to help give community housing providers better access to debt financing at a lower cost and on more flexible terms from banks.
Under the scheme, the Crown will guarantee 80% of loans provided to eligible Community Housing Providers by participating banks.
“That means more access to capital to get building, and more roofs over Kiwis’ heads,” said Finance Minister, Nicola Willis.
“The Government is dedicated to improving the way social housing is delivered. That means removing obstacles standing in the way of building homes, and inefficiencies that reduce the number built.
“I want to acknowledge ANZ, ASB, BNZ, Kiwibank and Westpac for working with the Government to turbocharge community housing growth through their enthusiastic participation in the scheme.”
Housing Minister, Chris Bishop said the initiative means banks can provide reduced interest rates to community housing providers.
“It may also allow banks to provide better lending terms. This will allow community housing providers to make decisions on their preferred financier based on the terms and pricing offered,” he said.
“This Government believes in social housing. We are working hard to deliver better housing to those who need support, including by assisting the community housing provider sector to expand and grow, with the government funding over 2000 new social homes in Budgets 2024 and 2025.
“Our ambition for the social housing system is for a level playing field between community housing providers and Kāinga Ora. The underlying ownership of a house – whether public or private – should be irrelevant. What matters is the provision of warm, dry homes to those who need them, along with social support if required.
“While Kainga Ora’s borrowing is done through the Crown, community housing providers currently access debt from the private market at higher rates and this has been identified by them as a real inhibitor to their growth.”
Back in March, the Government signalled it was exploring new Crown lending facilities and a loan guarantee scheme to better support community housing providers.
“In September we established Crown lending facilities of up to $150 million for the Community Housing Funding Agency (CHFA), which has now achieved an A+ credit rating from S&P Global and issued their first $200m of social bonds. CHFA is already helping community housing providers achieve much lower costs of borrowing,” said Mr Bishop.
“Scheme supported loans are available until 30 June 2027, for a maximum of five years from the date of issue. Once the terms are agreed between the community housing provider and the bank, the scheme loan will act like any other loan with its own terms and conditions.
“The scheme can support up to $900 million in both new lending and the refinancing of up to 50% of community housing providers’ existing lending. It can support up to $80 million in scheme loans for each community housing provider.
“The loan guarantee and the Government’s support for the Community Housing Funding Agency are short-term measures providing critical support while other changes are made to improve the system in the longer term, including simplifying the funding system.
“We know community housing providers are often the best placed to deliver housing solutions for people within their communities – and we’re backing them to get on with what they are good at.”
Community Housing Providers (CHPs) may be eligible for a loan under the Scheme if:
- They are registered CHPs
- The loans are being used for social and affordable housing
- The loans are provided by a participating bank, and:
- They are not on the bank’s watchlist.
Banks will assess each CHP’s individual circumstances to determine whether its loans are eligible.
More information on the CHP Loan Guarantee Scheme is available here.
