Labour has proposed a Crown guarantee for Community Housing Funding Agency Social Bonds, aiming to lower financing costs for community housing providers.
The party's housing spokesperson Kieran McAnulty announced the $950 million scheme, under which the government would repay investors if the agency could not meet its obligations. The guarantee would take effect from Labour's first Budget if elected.
McAnulty said "what we've announced today is a simple, pragmatic change that will make a material difference to the sector, and ultimately lead to more social houses being built at no cost to the government". He said the guarantee resembles existing protections for banks and would only be required if the agency defaulted.
McAnulty said that together with lower lending margins, the guarantee would lift CHFA's credit rating from its current A+ to AAA and reduce borrowing costs by approximately 0.5 percentage points. The scheme is estimated to enable one additional home for every 11 constructed.
Social enterprise Community Finance established CHFA in 2024 to consolidate financing requirements for community housing providers and offer less expensive debt. The agency has facilitated $530 million in funds nationwide and financed 34 providers.
The government currently guarantees 80% of loans from 5 banks to eligible community housing providers, with that scheme running until June 2027. McAnulty indicated Labour would extend that existing arrangement.
Housing Minister Chris Bishop said at the Community Housing Aotearoa Conference the government had already acted to remove financing obstacles. He said "CHFA is already helping CHPs access finance" and noted the agency provides refinancing at 4% fixed for 3 to 5 years, compared to 8.5% rates providers pay banks.