Trust House Redevelopment of Social Housing Portfolio
25 June 2024
Wairarapa-based community housing provider Trust House is planning on investing up to $130 million in redeveloping or rebuilding most of its housing portfolio over the next five to seven years, providing tenants a future in quality warm, dry, accessible and efficient homes built to modern standards.
“The investment demonstrates Trust House’s commitment to the long-term provision of social housing for low-income households in the Wairarapa in the years ahead”, said Trust House Chair Mena Antonio.
Trust House has provided social housing for the past 25 years, since purchasing the Housing New Zealand portfolio in March 1999. In 2014 Trust House became New Zealand’s first Community Housing Provider (CHP).
Over the next five to seven years, Trust House’s current portfolio of 470 homes, with an average age of approximately 60-70 years, will be replaced by:
- building 300 new two or one-bedroom homes on existing land owned by Trust House, designed primarily for tenants aged over 55 years; and
- refurbishing 50 existing family-sized homes.
“When we purchased the Housing New Zealand portfolio 25 years ago we committed to looking after the housing needs of low income people, and those aged 55 years and older. Our new strategy reaffirms our focus on those two groups of tenants.” Antonio said.
New Zealand has an ageing population, and the Wairarapa has one of the highest average aged populations of any region in New Zealand. In future Trust House expects increased demand for housing from people aged over 55 years. While people approaching retirement have typically owned their own homes, more and more are now entering retirement as renters on low incomes, and thus needing social housing.
The significant investment in transforming Trust House’s portfolio to new, fit for purpose and fit for the future homes will be financed substantially by the sale of approximately 240 existing Trust House homes, on sites deemed unsuitable for redevelopment, as well as increased debt funding. Selling some of the portfolio in this way will free up equity to help fund the planned demolition, and construction of new and refurbished homes.
Initial sales will occur as houses become vacant.
“A significant number of our existing homes are at, or are approaching, the end of their useful lives, and so our rebuild strategy is about transforming our housing portfolio and providing our tenants with quality homes that they are happy and proud to live in.” Trust House CEO John Prendergast said.
“Demolishing large and typically inefficient cold and old homes on big sections and replacing them with new smaller warm, dry and accessible homes enables Trust House to intensify its existing land holdings and meet the changing demand for housing.”
As well as sourcing capital from the sale of part of its current portfolio and increased debt funding, Trust House will also look to access government funding schemes to support the redevelopment. “Government is currently reviewing just how it can most effectively fund social housing, and our ability to access future government funding will influence the speed and breadth of the rollout of our strategy.” Prendergast said.
The end result of Trust House’s planned strategy will be a net addition of approximately 120 homes to the overall housing stock by 2031.
Construction of the first new development will not commence immediately, but is expected to get underway in around April next year.
“We will work closely with our Trust House tenants during the transition to ensure a minimum of disruption for them. We appreciate that news that we as their landlord intend selling or demolishing a large number of existing houses might be unsettling for tenants, and we are committed to minimise this as much as we can through the following:
- our approach will be as tenant-centric as possible, and we will do our best to keep communities connected and together;
- the end outcome of our strategy will be good quality, new or refurbished warm, dry, accessible, and efficient homes;
- there will be no change to tenancies in the short term:
- any sales of houses will initially be of houses that become vacant; and
- construction of our first new development will not commence immediately, but is planned to get underway in the first quarter of 2025;
- the first sites redeveloped in 2025 are likely to be sites that are already, or will soon be, vacant;
- if there is to be a change to a tenancy because of planned redevelopment, we will talk with affected tenants well in advance.” Prendergast said.
Trust House has already commenced first steps in the implementation of its redevelopment programme, over the past year 15 vacant houses have been sold, and 12 new houses completed. Trust House has identified a number of sites that it will soon commence seeking resource consent for, paving the way for redevelopment on those sites.
Trust House’s own strategy is separate to, but aligned with, plans announced last week for the creation of an inclusive Wairarapa-wide housing strategy. Trust House is a strong supporter of a regional housing strategy being developed by the forum of key stakeholders that will collectively identify and then work to address Wairarapa’s future housing needs, and identify the role of each stakeholder towards achieving the overall strategy.
“At Trust House we have a clear strategy for the role we can play, but we are only one part of the solution for Wairarapa’s future housing needs. Wairarapa’s success will come from us working together, drawing on our respective knowledge and areas of expertise and taking collective action.” Prendergast said.
For more information contact John Prendergast 027 222 0965, or email john@trusthouse.co.nz
Questions & Answers
Q: What is Trust House?
A: Trust House Ltd is a community-owned company based in the Wairarapa. It owns and manages approximately 470 rental homes, as well a range of hospitality businesses in Wairarapa, Pahiatua, Flaxmere and Porirua.
Q: Who are the rental homes for?
A: Trust House provides affordable rental homes to low-income individuals and families in our communities who need them most.
Q: How long has Trust House offered social housing?
A: Trust House has been a community landlord in Wairarapa and Tararua since March 1999, when it purchased a portfolio of homes from Housing New Zealand.
Q: So what’s changing?
A: As part of a future-focused strategy to meet the needs of tenants, Trust House will completely redevelop or renew its portfolio of 470 rental properties over the next five to seven years. This will include selling a number of existing houses and using that capital to help build predominantly new, smaller homes to provide for the rapidly increasing number of over 55-year-olds requiring rental accommodation
Q: Why not refurbish existing houses, rather than building new
A: The current stock of Trust House houses was largely built in the 1940s and 1950s, so were not designed to suit 21st century living – and refurbishing them could not achieve that.
The amount, and cost, of refurbishment required on many of our houses is uneconomic.
The future demand for housing in the Wairarapa is increasingly for smaller, 2 bedroom houses on smaller sections, rather than the existing stock of larger houses on big sections.
Q: Will Trust House’s reduction in homes worsen the housing shortage
A: No. Trust House is building new homes, and selling others. The net result will be approximately 120 more homes – in addition to Trust House’s eventual portfolio of 350 homes, the approximately 240 homes sold will still be available to meet housing needs, so in total there will be 590 homes, a net increase of 120 homes from the current amount.
Q: Why does the number of rental houses in the Trust House portfolio have to be reduced?
A: Trust House will sell approximately 240 properties, with sale proceeds helping to finance the substantial redevelopment programme. Using this capital to reduce the amount of borrowing required is important in the context of high interest rates and building costs.
Q: If the house that I currently rent is one of the houses to be sold, will I have the opportunity to buy it?
A: Yes, as the existing tenant you will have an opportunity to buy the house, at current valuation
Q: Why is Trust House’s primary focus shifting to over 55-year olds?
A: A significant number of Trust House’s existing tenants are in that age bracket.
New Zealand has an ageing population, and the Wairarapa has one of the highest average aged populations of any region in New Zealand. In future, Trust House expects higher demand for housing from people aged over 55 years. While people approaching retirement have typically owned their own homes, more and more are now entering retirement as renters on low incomes, and thus needing social housing. Demolishing large, typically inefficient and cold old homes on big sections and replacing them with new smaller warm, dry and accessible homes enables Trust House to intensify its existing land holdings and meet the changing demand for housing.
Q: Where will tenants live if their home is sold or demolished?
A: Trust House appreciates that changes to its housing portfolio will cause disruption and unease for tenants, and some will require alternative accommodation. To proactively support tenants that need to be rehoused, Trust House will have conversations with each affected household to help find a new home, which might include:
- another Trust House home;
- a house provided by Kāinga Ora – Homes and Communities, or another social housing provider;
- the open rental market.
Q: When will tenants have to move out?
A: Trust House is staging the sales, and redevelopment, of its homes over the medium to long term. The first redevelopment will likely commence in or around April 2025.
We will start with those sites that are suitable for redevelopment and have existing vacancies, so as to cause least disruption to tenants. And progressively identify future sites to be redeveloped, and have conversations with tenants impacted long before a shovel goes in the ground.
The entire project will take between five to seven years, and most tenants will not be impacted for some time.
Q: Will tenants’ rents go up because of these changes?
A: Rents won’t go up specifically due to these changes, but rents do need to be increased periodically, usually annually. For example the annual rent review for Trust House’s non-Income Related Rent Subsidy tenants will occur during July.
A range of factors are considered when setting rentals, including increases in costs borne by landlords, inflation, and the long-term financial sustainability of Trust House as a social housing provider. Trust House is very mindful of the impact of rent increase on tenants and any decision to adjust them is taken very carefully.
Two thirds of Trust House’s tenants qualify for the government’s Income Related Rent Subsidy, which limits the amount of rent paid by the tenant to no more than 25% of their income.
Q: Will Trust House continue to accept applications for housing from people on the Housing Register?
A: Initially it will not be possible to accept new tenants from the Housing Register, Trust House’s priority will be to provide housing for existing qualifying tenants as we progress the redevelopment of our housing portfolio.
Other housing providers such as Kāinga Ora have recently opened new social housing spaces in the Wairarapa, and are continuing to do so.
Trust House is working closely with Kāinga Ora and other social housing providers.
Q: What is the Wairarapa Housing Strategy?
A: Trust House recently helped convene a housing forum with the objective of developing a collaborative housing strategy for the Wairarapa. The various agencies and organisations involved in Wairarapa housing are working to collectively identify Wairarapa’s future housing needs, and identify the role of each entity towards the achievement of those housing outcomes. Trust House’s own redevelopment strategy will contribute towards that broader Wairarapa housing strategy.