A+ Credit Rating for Community Housing Funding Agency Unlocks Cheaper Social Homes

Housing Minister Chris Bishop emphasized that the Government’s vision is to create a “level playing field” between CHPs and Kāinga Ora.

The New Zealand Government has welcomed news that the Community Housing Funding Agency (CHFA) has secured an A+ credit rating from international ratings giant S&P Global, a development that is expected to dramatically cut borrowing costs for community housing providers (CHPs) and deliver more affordable homes across the country.

Strengthening the Social Housing Sector

Currently, community housing providers are responsible for around 14,000 social homes—about 16 percent of the total stock—while state-owned Kāinga Ora manages approximately 73,000 homes. CHPs include well-established organisations such as The Salvation Army, Accessible Properties NZ Ltd, and Te Āhuru Mōwai Ltd Partnership, which provide housing alongside wraparound social support for vulnerable households.

Housing Minister Chris Bishop emphasized that the Government's vision is to create a "level playing field" between CHPs and Kāinga Ora. "The underlying ownership of a house—whether public or private—should be irrelevant. What matters is the provision of warm, dry homes to those who need them, along with social support if required," Bishop said, stressing the principle of competitive neutrality.

Levelling the Playing Field

Until now, CHPs faced a structural disadvantage compared to Kāinga Ora because the state housing agency borrowed directly through the Crown at lower rates, while CHPs had to rely on more expensive private lending. Recognizing this, the Government earlier this year established Crown lending facilities of up to $150 million for the CHFA, on the condition that it secured an internationally recognized credit rating.

With the A+ rating now achieved, CHFA can borrow at significantly lower interest rates, passing these savings on to CHPs. Bishop noted that for many providers, interest rates could drop by up to 1.00 percentage point, reducing annual financing costs by 15–20 percent.

Tangible Savings and Greater Value

The financial implications are substantial. For existing and upcoming social housing contracts, including those supported through Budgets 2024 and 2025, CHPs refinancing through CHFA could save up to $75,000 over the life of a 20–25-year contract. This allows providers to reinvest directly in social programmes while requiring less upfront and ongoing Crown support.

For new social housing projects, the Government expects to save $115,000–$120,000 per house over the life of a 25-year Income Related Rent Subsidy (IRRS) contract. This translates to greater output from existing budgets. For example, the $140 million allocated in Budget 2024 to deliver 1,500 CHP homes could instead fund around 1,767 homes under the new borrowing terms—a significant 18 percent increase.

A Win for Taxpayers and Communities

Bishop underlined that efficient use of taxpayer dollars is a cornerstone of the Government's housing strategy. "Getting value for every taxpayer dollar we spend is a core priority for this Government, so it's encouraging to see that the Crown's loan to CHFA is resulting in more efficient social housing delivery and better value for taxpayers," he said.

The shift is expected not only to accelerate the construction of social and affordable housing but also to enhance the sustainability of the CHP sector by lowering long-term costs and improving competitiveness. By easing financial pressures, the Government aims to enable CHPs to focus on their core mission: providing stable, safe, and supportive housing for those most in need.