Govt Launches Loan Guarantee Scheme to Boost Community Social Housing

The Government has unveiled a new loan guarantee scheme to accelerate the delivery of social housing by supporting community housing providers (CHPs) with better access to financing. The initiative is expected to reduce borrowing costs, unlock new housing projects, and deliver more affordable homes to New Zealanders in need.

A New Approach to Social Housing Delivery

Finance Minister Nicola Willis said the scheme reflects the Government’s commitment to removing barriers that have slowed housing development.

“The Government is dedicated to improving the way social housing is delivered. That means removing obstacles standing in the way of building homes, and inefficiencies that reduce the number built. This initiative gives community housing providers better access to capital to get building – and more roofs over Kiwis’ heads.”

Under the programme, the Crown will guarantee up to 80 per cent of loans provided to eligible CHPs by participating banks. This reduces financial risk for lenders and lowers the cost of capital for housing providers.

The scheme is designed to complement the Government’s partnerships with CHPs, who are already delivering more than 2,000 new social homes through Budgets 2024 and 2025.

Support from Major Banks

Five of New Zealand’s largest banks – ANZ, ASB, BNZ, Kiwibank, and Westpac – have agreed to participate. Their involvement is expected to significantly increase the availability of capital for housing providers.

Housing Minister Chris Bishop said the scheme will encourage more competitive financing offers.

“Because banks won’t need to hold as much capital against these loans, they can pass on reduced interest rates and better lending terms. This allows CHPs to choose their preferred financier based on the best pricing and conditions available.”

Bishop stressed that the scheme creates a more balanced housing system:

“Our ambition is a level playing field between community housing providers and Kāinga Ora. What matters is not who owns the house but that New Zealanders in need get access to warm, dry homes and the social support that comes with them.”

Building on Recent Reforms

The loan guarantee scheme follows a series of measures introduced in 2024 to strengthen the community housing sector.

• In March 2024, the Government signalled new Crown lending facilities and guarantee options for CHPs.

• In September 2024, Crown lending facilities of up to $150 million were made available to the Community Housing Funding Agency (CHFA).

• The CHFA secured an A+ credit rating from S&P Global and issued its first $200 million in social bonds, helping CHPs access cheaper debt financing.

These initiatives have already lowered borrowing costs, but the loan guarantee scheme is expected to scale impact even further by supporting up to $900 million in new lending and refinancing.

Scheme Details

• Duration: Loans available until 30 June 2027.

• Loan Length: Maximum of five years per loan.

• Coverage: Up to $80 million per CHP, including refinancing of up to 50% of existing debt.

• Total Capacity: Supports up to $900 million in lending.

• Eligibility: Terms agreed directly between CHPs and participating banks, with Crown backing.

Once agreed, loans will function like any other commercial financing, with their own terms and conditions but enhanced security due to the Crown’s guarantee.

Short-Term Support, Long-Term Reform

While the loan guarantee scheme and CHFA lending facilities are designed as short-term measures, the Government is also working on longer-term system improvements, including:

• Simplifying funding structures.

• Ensuring sustainable partnerships between Kāinga Ora and CHPs.

• Reducing red tape for housing projects.

Willis and Bishop stressed that CHPs are often best placed to provide tailored solutions within their communities, thanks to their close relationships with local iwi, charities, and social service providers.

“We know community housing providers are often the best placed to deliver housing solutions for people within their communities – and we’re backing them to get on with what they are good at,” Bishop said.

Towards More Affordable Homes

The Government believes this scheme will not only accelerate the pace of construction but also improve affordability by cutting financing costs. By providing financial certainty to CHPs, the Crown aims to ensure more families can access safe, warm, and stable housing.