Help on way for Waikato renters

Monday, 28 August 2023

Affordable rental apartments with long-term leases in central Hamilton - that’s the promise of an initiative waiting on government funding to go ahead.

It’s a glimmer of hope for people facing rising rents and scarce options in the face of a region-wide housing shortage.

Bridge Housing Trust aims to build a three-storey development of up to 30 apartments in Tristram St that offers security of tenure at below-median rents.

The trust hopes to gain scale and roll out its model as part of a bold aspiration to build 1000 homes in 10 years around the region.

Bridge is turning its attention to the rental market after seeing the need while completing the first stage of an affordable 47 home development in Cambridge.

The first residents will move into Peake Mews in Cambridge in October. Some are buying their house and land outright, while others are buying the house only, at a substantially lower price, and lease the land. That sees two-bedroom homes selling for $325,000.

But general manager Jennifer Palmer said the trust had realised some would still miss out, with households typically needing incomes around $100,000.

“Of the inquiries that we get, I would say the majority of them are still unable to get a mortgage.”

That sees rentals set to be included in future Peake Mews offerings. Palmer said the change came out of a realisation that the key for people was not necessarily home ownership, but security of tenure.

For the central Hamilton development, which still needs resource consent, the trust has applied for funding from a new government scheme.

Palmer expected to hear back by the end of the year, with building likely to start early in the new year and potential completion in March 2025.

Under the scheme, Bridge Trust will commit to charging no more than 80% of median rent for at least 15 years. In return the Ministry of Housing and Urban Development pays half the cost of the build.

The funding became available in the Waikato six months ago, after an earlier rollout in Auckland and other parts of New Zealand.

The Tristram St development will be modelled on Simplicity Living’s Auckland build-to-rent offering, a “cookie-cutter” approach that brings down building cost and which is seeing hundreds of apartments being built in the city.

Those at Tristram St are likely to be three-level walkups on the 900 square metre site, with the final number set to depend on how many single bedroom apartments are built as part of the mix.

“Hopefully we can get the methodology right so that we can get scale and we can roll that out,” Palmer said.

The model could also be available for others. She said she had presented to some people in Otorohanga, which has the same challenge but on a smaller scale.

“So can they pick up exactly what we’re doing and roll out exactly what we’re doing, but in Otorohanga, and all of a sudden 100 houses there almost solves their entire housing problem.”

Rents in the Waikato have been steadily increasing in the past 10 years, according to figure.nz - from a median weekly rent of $295 in January 2013 to $520 in the same month this year.

Rental affordability in Hamilton, meanwhile, has fluctuated over the same time period, according to council figures, but is worse now than 10 years ago.

Census data from 2018 showed about a third of New Zealand households rent.

A sense of the scale of the challenge is given by the fact that the Tristram St site, worth about $2 million, is being donated by Brian Perry Charitable Trust.

That’s where not-for-profits such as Bridge Trust see gains can be made through inclusionary zoning, in which developers are required to make a proportion of houses in residential developments affordable.

The approach has found favour with Waipā District Council, which is set to add inclusionary zoning through a change to its district plan, drawing on a draft set of plan provisions from the Waikato Housing Initiative.

The Initiative’s chief executive officer, Aksel Bech, paints a sobering picture of the housing market.

He said even during the building boom of the past three or four years, with up to 4500 homes being consented yearly, very little of it was affordable, or for rent.

“There’s good news in that we built more, but not good news in that we didn’t build the right type of dwelling, so not enough one and two bedroom units and not necessarily in the right places and certainly not at the right price,” he said.

“There’s a lot of stress there at the moment in our communities about just not being able to find somewhere for rent, and then not being able to afford it - you know, people actually being priced out of rentals now.”