Government introduces loan guarantee for social housing

The scheme will help give community housing providers better access to debt financing at a lower cost and on more flexible terms from banks.

“That means more access to capital to get building, and more roofs over Kiwis’ heads,” Finance Minister Nicola Willis said.

Under the scheme, the Crown will guarantee 80 per cent of loans provided to eligible community housing providers by participating banks.

“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,” Ms Willis said.

Housing Minister Chris Bishop said that since banks won’t need to hold as much capital to cover the loan’s debt, they can use the capital elsewhere.

“This 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,” Mr Bishop said.

The Government has previously 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 has issued their first $200 million of social bonds. CHFA is already helping community housing providers achieve lower costs of borrowing.

Mr Bishop said that the scheme-supported loans are available until June 30, 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 per cent of community housing providers’ existing lending. It can support up to $80 million in scheme loans for each community housing provider,” he said.

“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.”

FULL STORY

More social homes for less with loan guarantee (Beehive)