Public housing: Can companies do the job of charities?

• There are 83 registered community housing providers in Aotearoa, and just one is for-profit: Modus Community Housing
• It says it's building desperately needed homes, it's in it for the long haul, and it should not matter who builds and manages homes
• Community housing advocates are worried commercial providers will sell up at the end of their government contracts to private landlords who charge market rents, leaving tenants in the lurch

The country's only for-profit registered community housing provider says a person living in a car would not care whether their new home is built by a company rather than a charity.

But community housing advocates are concerned private companies will sell up when their government contracts end, leaving tenants in the lurch.

Modus Community Housing is the only one of 83 registered community housing providers (CHPs) in Aotearoa that is for-profit.

Managing director David Nixon said the regulator invited his organisation to apply for registration, given its skillset as a developer of social homes, and commitment to the sector.

"We've only ever developed public housing, so we've never done developments for the private market... our sole focus has been to deliver good quality public housing schemes."

Modus now owns and manages 72 community housing units in Tāmaki Makaurau Auckland, across three sites - and manages another 60 for another developer, with plans to expand across the motu.

Community Housing Providers - Modus included - receive the government's income related rent subsidy (IRRS), which tops up tenants' payments to meet market rent.

In return they commit to putting that cash back into housing - but only while they are under government contracts. After that, they can do what they like with the assets, including selling up.

But Nixon said his company was in it for the long haul, and it had committed to contracts that could be extended up to 38 years - longer than the standard 25 year term - to prove it.

"In order to allay any fears that we might be looking to remove these from the public housing pool, we made an additional commitment over and above what a normal charitable CHP would make," he said.

Modus considered setting up as a charity, but learned it would be easier to secure financial backing as a company, allowing them to build at scale.

Funders were also keen to get on board, Nixon said.

"Funders are interested because we have a government-backed contracted which has a low risk of default, and no real vacancy rate."

It was a new way of operating as a community housing provider, and that should be encouraged, he said.

"Provided it's done by people and entities that meet the requirements of the regulator, I think that everybody should be supported strongly in their endeavours... the notion that there's only way to do something just seems fundamentally flawed to me.

"I'm pretty sure that the person that was sleeping in their car doesn't care whether or not their house is being provided by me, or by a not-for-profit."

Modus also had strong relationships with other social service providers to provide "wraparound support" and help people maintain their tenancies - just like other CHPs do, Nixon said.

Associate Housing Minister Tama Potaka said he cared more about getting the houses built, and less about who built them.

"Certainly what we want to see is more houses built, and that's both by the government, by community housing providers and predominantly by private developers."

Concerns companies will make money from the country's most vulnerable

Community Housing Aotearoa deputy chief executive Chris Glaudel did not agree companies should profit from community housing - despite Modus being one of its members.

The public investment into private providers would end up in the pockets of shareholders, rather than being funneled back into more community housing, he claimed.

Unlike commercial organisations, charities were required to charge below market rates even if they were not under a government contract, he said.

"There's the assurance that if they no longer were receiving the [rent subsidy] it would continue to be affordable housing," he said.

"If for whatever reason they chose to sell that housing, the profits from that would have to go back into the charitable mission, and build new housing maybe in other areas or a different design to meet the then-current needs."

He did not buy the argument that it did not matter who built community houses.

"We disagree fundamentally with that, we think it does matter, we think that local authorities, iwi Māori organisations, registered charities are the best placed to hold that public investment over time."

Ali Hamlin-Paenga from Te Matapihi - a Māori housing organisation - agreed.

"They have a constitution, their constitution is about purpose, and their constitution is about delivering services and ensuring that our most vulnerable communities, and wider communities, are supported," she said.

"They are not in a business of selling up for profit when they see fit."