- Hon Chris Bishop
News that the Community Housing Funding Agency has achieved an A+ credit rating from S&P Global will mean more social homes can be delivered more cost effectively, Housing Minister Chris Bishop says.
"Currently, Community Housing Providers (CHPs) account for 16 per cent of our social homes, or around 14,000 houses, while Kāinga Ora provides about 73,000 social homes.
"Organisations like The Salvation Army, Accessible Properties NZ Ltd, and Te Āhuru Mōwai Ltd Partnership, among others, do a great job providing housing and other support to people in need. This Government wants the CHP sector to grow and thrive.
"My ambition for the social housing system is for a level playing field between CHPs 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.
"We call this competitive neutrality. In some areas and for some people, CHPs are the answer. In other areas, Kāinga Ora will be the way to go. But while KO's borrowing is done through the Crown, CHPs have until recently had to access debt from the private market at higher rates meaning it's been more expensive for them to deliver social homes.
"Earlier this year, the Government moved to level the playing field between Kāinga Ora and CHPs by establishing Crown lending facilities of up to $150 million for the Community Housing Funding Agency (CHFA). This support was conditional on CHFA obtaining a credit rating.
"I'm pleased that CHFA has today received an A+ credit rating from international ratings agency S&P Global.
"This credit rating means they will be able to access capital more easily at lower rates. This means they can pass those savings on to CHPs who can then deliver social housing at lower costs.
"This very good credit rating will unlock lower borrowing costs for CHFA and for CHPs, meaning they'll be able to deliver more social homes for less.
"For many CHPs, it will mean headline interest rates reduce by up to 1.00%, lowering their annual interest bills by 15-20%.
"Lowering the borrowing costs for CHPs will have two key benefits.
"For existing and soon-to-be-signed social housing contracts including those funded through Budgets 2024 and 2025, CHPs moving to new loan terms financed by CHFA could save up to $75,000 over the 20 to 25-year average term of existing contracts. CHPs can reinvest these savings into social programmes and will require less upfront and ongoing funding from the Crown to compete to build new social and affordable housing places.
"For new CHP social housing, the Government is expected to save $115k-$120k per house over the life of a 25-year IRRS contract[1]. This means we can do more to help people in need with the same amount of funding.
"For example, in Budget 2024, $140m funded 1,500 CHP social housing places - but with 1% cheaper borrowing rates, that same amount could fund 1,767 places, an 18% increase of 267 houses.
"Getting value for every taxpayer dollar we spend is a core priority for this Government, so it's encouraging to see that the Crown's loan to CHFA is resulting in more efficient social housing delivery and better value for taxpayers."
[1] Assumes a 1% in interest rate saving over the full term of the contract.
Note to editor:
The Community Housing Funding Agency (CHFA) brings together philanthropists, fund managers, Government funding and leading charities to tackle New Zealand's social housing challenges.
CHFA was launched by Community Finance in 2024 and aggregates the finance requirements for CHPs around New Zealand, unlocking lower cost finance at scale to support the delivery of social housing. It is the largest lender to CHPs in New Zealand.
