Kainga Ora’s turnaround plan will refocus the agency on its core mission of building and managing government-owned social housing in a financially sustainable way, Housing Minister Chris Bishop says.
“Kainga Ora is an important Crown entity, with assets of $47 billion and over $2.5 billion of expenditure each year. It currently owns around 75,000 homes and is the country’s biggest landlord.
“The previous government poured billions of dollars into Kainga Ora, with debt on its balance sheet rising from $2.3 billion in 2017/18 to $16.5 billion in 2023/24.”
Operating deficits grew from a surplus of $76 million in 2017/18 to a deficit of $568 million in 2023/24. Kainga Ora’s 2023 Board-approved budget showed debt forecast to grow to $24.8 billion by 2026/27, outside of the previous government’s debt limit for the organisation.
Staff numbers grew from around 2000 in 2020 to around 3477 by the end of 2023 — all this at a time when the social housing waitlist grew to more than 20,000 applicants.
“In December 2023 the Government commissioned an independent review, led by Sir Bill English, into Kainga Ora. The report from this independent review was released in May 2024, with two broad findings — that Kainga Ora was underperforming and not financially viable without significant savings as well as funding and financing changes, and secondly, that the wider social housing system was not delivering the results New Zealand needs,” Bishop says.
“The review made it clear that Kainga Ora was in considerable financial strife. The Government appointed a refreshed board and asked them to deliver a turnaround plan by the end of 2024 to return the agency to financial sustainability.
“Cabinet has now considered and endorsed the plan, which will refocus Kainga Ora on its core purpose of being a good social landlord, and improve operating performance and reduce losses, with debt capped at an acceptable level.
There are five major components to the turnaround plan:
• KaingaOra to be refocused on its core mission — building, maintaining and managing quality social housing, and being a supportive, but firm landlord.
• Improved tenant and community management.
• Improved housing portfolio and build management — better managing existing Kainga Ora assets and building or renewing homes as efficiently as the market, including simplifying social housing building specifications and using all available building delivery channels.
• Improved organisational performance — a focus on cost effectiveness, including reducing high overheads and leveraging buying power more effectively.
• A more persistent and sustainable approach to funding and associated settings.
Renewal of Kainga Ora stock
“The previous government’s funding for new social houses finished in June 2025, a “fiscal cliff” which the coalition government has had to confront.
Kainga Ora is currently funded to deliver around 2650 additional houses around New Zealand through to 2026, and the Government has also funded 1500 further social houses to be delivered by Community Housing Providers from June 2025 onwards.
“The Kainga Ora turnaround plan means that from 2026/7 onwards, Kainga Ora will be involved in around 1900 to 2000 construction events per year, made up of approximately 1500 new build homes and 400 retrofits of existing homes,” Bishop says.
“This will be offset by demolitions associated with redevelopment activities, and sales of around 900 homes per year. This means the number of KO social houses will not reduce over time, and existing older or unsuitable housing stock is refreshed.
“Kainga Ora sales will focus on older properties in high value areas, with the proceeds going to provide multiple other units in different areas. The sales programme will also focus on houses which are not fit for purpose, where the typology is ill-suited to the particular area, or which are simply uneconomic to maintain or redevelop.
“Despite rhetoric from Labour in the past, divestment of properties in order to manage stock is a routine approach to Kainga Ora’s operations. In the past five years they have sold, demolished or ended the lease on more than 5000 properties as part of their normal stock renewal process. The plan allows them to do more of this so the old, unfit housing stock can be renewed more quickly.
Construction costs
“Advice from the Board is that Kainga Ora has been building houses for approximately 12% more than market comparisons. The plan commits Kainga Ora to delivering new builds at fully allocated costs that are in line with, or better than, market rates.
“Ministers are clear that Kainga Ora should be building or acquiring simple, functional, warm and dry houses, as quickly and efficiently as possible.”
Narrowed scope
“The previous government gave Kainga Ora an enormous number of tasks — everything from managing infrastructure funds, to large-scale urban development and KiwiBuild underwrites.
“In line with the back to basics approach, Cabinet has agreed that residual KiwiBuild underwrite activity will be transferred to the Ministry of Housing and Urban Development, administration of the Infrastructure Acceleration Fund will transfer to the new National Infrastructure Funding and Financing Agency, and the Kainga Ora Land Programme will be wound down. Legislation will also be progressed this year to amend the Kainga Ora Homes and Communities Act.”
Financial performance
“The impact of the Kainga Ora plan is a net reduction in deficits of around $190 million in this financial year, with a reduction in the deficit in 2027/28 of $354 million compared to the 2023 Pre-Election Update. Debt is forecast to be $1.8 billion lower in 2027/8 compared to the forecast included in the 2023 Pre-Election Update.
“Today’s plan is a big step in the right direction for Kainga Ora and I would like to thank Chair Simon Moutter and the rest of the Board for their hard work. The Government will be closely monitoring progress as the plan is implemented,” Bishop says.
