The New Zealand Government has introduced a new flexible housing fund aimed at streamlining investment in social and affordable housing. This initiative aims to respond to rising housing demand and deliver more homes where they are needed.

Through Budget 2025, the fund will bring multiple housing investment streams into a single contestable pool, enabling funding to be directed to projects based on need rather than fixed allocations. From 01 July 2027, it is expected to support the delivery of at least 675 to 770 new social homes and affordable rental units across the country.

Officials say the change is intended to reduce fragmentation across programs and give providers greater flexibility to respond to local housing pressures. Instead of predetermined grants, housing providers will compete for funding through a structured two-stage application process focused on capability, cost effectiveness and delivery outcomes.

Targeted delivery

The Investment Plan identifies specific regions where housing demand is most acute, including the Far North, South Auckland, Eastern Bay of Plenty, Gisborne, Hastings, Hamilton, Tauranga, Wellington, and Christchurch.

Community housing providers, iwi Māori organizations and other eligible groups will be able to deliver homes through new builds or in some locations through leasing or purchasing existing stock. Priority will be given to smaller homes and family units that reflect local demand, with a particular focus on whānau Māori, sole-parent households, older people and disabled residents.

How the fund works?

The model combines ongoing operational payments with limited upfront capital support. Ongoing funding will cover financing and operating costs over the life of the contract, while upfront funding may be available for projects that face challenging development economics or limited access to finance.

Applicants will also be required to contribute their own equity and demonstrate financial strength, delivery capability and value for money.

To manage costs, the Ministry is introducing investment benchmarks based on market construction and operating data. Proposals that exceed these benchmarks will need to justify higher costs or revise plans, with the aim of keeping projects affordable for both providers and the Government.

Two-stage process

Applications will open in February 2026, with stage one assessing delivery partners’ track records, financial capacity, and proposed programs.

Stage two will then focus on site-specific projects, and successful providers will receive ring-fenced allocations and contracts to support delivery from 2027 through to 2029.

Officials say the goal is to maximize the number of households housed while lowering the long-term cost of housing support.

As housing pressure continues to intensify across many regions, the fund signals a shift toward more coordinated and outcome-focused investment. It is also expected to create new opportunities for community housing providers and development partners to participate in publicly backed housing delivery.