Affordability

One of the core tenets of The Viva! Project is affordability.  With housing availability and house prices reaching crisis point, especially in Christchurch, there is a need for systemic changes in the way we build and renew our housing stock.

PROVIDING AFFORDABLE HOUSING:
SOME ISSUES AND ALTERNATIVE APPROACHES

1.     CONSTRUCTION COST REDUCTIONS

1.1  Minimising the size of units.  Shared community/commercial laundry, visitor accommodation (i.e. shared “spare bedroom”); garden shed, workshop; optional leasable storage, car-parking and maybe freezer storage.

1.2  Units are single level with “only” one bathroom and one toilet (separate)

1.3  Lower cost foundation systems

1.4  Modular

1.5  Prefabricated (factory-produced and assembled on-site by workers with only basic training and skills)

1.6  Low-cost manufacturer

1.7  Sweat-equity

1.8  Units finished to varying levels (à la Toronto’s Grow Homes: core living areas finished – or not.  Other rooms could be just the unlined shell.)  Purchasers finish and fit-out to their standard using their own resources and to their own timetable (i.e. another opportunity for more “sweat equity”, in the case of private buyers)

1.9  Functional rather than fashion hardware, whiteware, furnishings and finishings

1.10  Building materials “alternatively” sourced (i.e. not from NZ monopolistic Fletchers Group)

 

2.     DEVELOPMENT COST REDUCTIONS

2.1  Co-operative multi-owner-managed development (no “developer” margin/profit)

2.1  Employ draughts-people not architects

2.2  As many buyers as possible purchase pre-build, off the plans (including retail/commercial premises, and especially to Social Housing providers: CCC, Housing NZ, Latimer Community Housing Association, Anglican Care, etc. [MBIE Social Housing Fund provides capital in advance of construction]).  e.g. community-compatible ‘religious’ organization pre-purchases residential units and the community meeting house.

2.3  Stage the project

2.4  Negotiate reduced Development Contribution, based on low demand placed on civic infrastructure and on provision of on-site green and recreational space and community services.  Negotiate for payment to be delayed and spread over time.

Non-replicable strategies specifically for first and/or CCC-supported development:

2.5  Negotiating a discount on land price. Payment for land to be at conclusion of development and then as homes are sold.

2.6  Gaining sponsorships from technology suppliers (leading edge publicity; live on-line monitoring of performance)

2.7  Supply of e-cars and charging stations by retail electricity supplier (as for Auckland/Wellington apartment block by Bosco Connect www.bosco.co.nz )

 

3.     IMPROVING FINANCIAL ACCESSIBILITY – PURCHASE

3.1  Long-term lease of the land, rather than owning it (Owned by a Charitable Trust or CCC or by some of wealthier owner-occupiers or by investors)

3.2  Dwellings available to rent (Initially the market will be stronger for rental, until more people realize the desirability of the lifestyle and the investment value of units in the development) (Owned by social housing provider[s] or options as for land)

3.3  Mortgagors, recognizing that reduced costs of operation and maintenance enables borrowers to more comfortably service mortgages, agree to higher loan limits and other favourable treatment (e.g. KiwiBank – already providing subsidies for energy saving installations)

3.4  Rent-to-buy

3.5  NZ Housing Foundation (http://www.nzhf.org) or similar investor equity stake, possibly 30%.

3.6  NZ Housing Foundation or similar “Affordable Rental” scheme.

3.7  Cross-subsidies (development margin is higher on larger, more expensive dwellings/apartments to allow for a lower margin on smaller, low cost ones).

4.     IMPROVING FINANCIAL ACCESSIBILITY – HOLDING COSTS

4.1  Reduced costs of operation and maintenance (especially energy costs, use of active and public transport and avoidance/reduction of vehicle costs, and on-site food production.  CCC provides adjacent bus stop shelter.  Also contributions / support from Social Housing providers for running facilities and maintaining common areas.  Where use of a car is necessary, shared-car arrangements are the least expensive; a commercial scheme is www.cityhop.co.nz)

4.2  Minimizing financial costs (interest) by establishing a JAK-type fund 1

4.3  Village Community Association supports residents to use timebanking (www.lyttelton.net.nz/timebank) and local exchange and trading systems (LETS http://en.wikipedia.org/wiki/Local_exchange_trading_system e.g. PegX www.pegx.co.nz) to reduce expenditure of scarce dollars.

 

1    JAK cooperative bank, Sweden (www.jak.se ), NZ$230M under management, operates on borrower/lender reciprocity, without charging or paying interest, thus massively reducing the cost of finance over the lifetime of a loan.

     Sustainable Urban Village (SUV) supporters with cash invest in the fund.  Individual borrowers and the SUV Development Company repay the debt/”obligation” over time, and the simultaneously banked matching savings, operating cash and maintenance/development reserves contribute to borrowings by the original depositors or their beneficiaries and by further SUV developments, etc.

3 thoughts on “Affordability

  1. Pingback: Viva! Affordability paper | The Viva Project

  2. This sounds exciting! Just how can you be a co-operative, and sell units? A co-operative would sell shares, would it not, as the property is communally owned. What legal structure do you envisage? Is this rather a co-housing project than a co-operative?

    If Christchurch is anything like Auckland, where I live, cost for the land will be a considerable chunk of the total. Making the best use of every square metre of land will therefore be the most promising strategy for cost reductions. Minimising the size of units, as listed above, is a good first step. In addition, you will need to stack units. Optimised structural, acoustical and fire-safety measures are paramount to doing this successfully. Unfortunately, there’s not a strong tradition of any of this in NZ, so you need to get some experts on board for this. Best of luck with your project !

  3. The initiative is great, yet so frustrating when coming up against the bureaucracies that control our every move.
    From what l have observed the quality of any development is paramount to me in meeting the long term objectives.
    Unfortunately we come from a culture of private ownership as being paramount in determining individuality and a perceived freedom except from the banks of course. Its a winner takes all, and to hell with the rest mentality, which has led us to over regulation and an acceptance of mediocrity.
    I say unfortunately because we have no real experience of what communal or shared living environments could be like. There are many great examples of social housing developments that have been developed and built though the co-operation of all stakeholders, and are a vital part of what it is to be a city. Christchurch is as l see it could overlook a prime opportunity to re-think how it could re-develop it self. One thing is to have all these wonderful ideas floating around and encouraging everyone to be involved in the enthusiasm and creative thought of the new, then to kill the ideas off one by one by the cry of non-affordability.
    Clearly the luxury of individual home ownership is becoming less of an option for many and personally l say that is a good thing when you consider the sheer duplication of services, the waste of materials, and the kilometers of bitumen to get there, as this model continues to seed, let alone the social isolation of a drive in drive out society.
    Many major cities, and wealthy cities at that house much of their population in well conceived dense living environments.
    So what l am really getting around to saying is that instead of trying to cut back every aspect of the quality to make a project affordable at its peril, of either the idea being taken up by a profit driven developer or the development falling into mediocrity through incompetence.
    There are clearly many innovative ideas being presented that could contribute positively to the creation of a way forward. My suggestion would be that a corporation, or corporations, either in partnership with council government or private developers, be formed for the development of areas of the city identified under the ‘grand plan’ as being suitable for urban development. These corporations be inclusive of all stakeholders, including existing land owners, whether they become part of the development or their land is acquired by private treaty or public acquisition, those who register interest or lock into future ownership or leasehold arrangements, financiers etc and anyone who will benefit from the outcome. These Corporations then to employ the best ideas, architects, designers ,landscape architects, to firstly engage in a consultative process with all stakeholders and the wider community to firstly come up with a quality development that ticks all boxes and will provide the city with something to apart from being proud of, can be heralded as being socially innovative, sustainable into the future and desirable.
    My fear for the city is that as a last resort we will accept a hotch potch of mediocre, complying developments on individual sites. The opportunity to rebuild Christchurch has given an unprecedented window into what could be if everyone stood together and held hands on this. We need ‘City Fathers’ (not a very contemporary term) that lead from the front!

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