Simplicity Living Q & A
Simplicity has launched a significant build to rent housing programme, in cooperation with major home builder NZ Living.
The intention is to build high quality, affordable apartments and townhouses for long term rent across New Zealand, providing many Kiwis with another housing option.
The homes will be built by Simplicity Living. Certain funds within the Simplicity KiwiSaver Scheme (not including its default fund), and the Simplicity Investment Funds, own and provide funding to Simplicity Living through a wholesale funding arrangement. The Funds will get the capital growth and income generated.
Why is Simplicity building houses?
We believe you can make money and do good. It’s what we do %)
Rental housing can provide reliable returns for members. Our funds currently invest in bank deposits and investment grade bonds. But returns from bank deposits are low, and returns from bonds can be low too.
And warm, dry, affordable homes, in a community, can be a ‘fence at the top of the cliff’, helping prevent costly health and social problems.
Just like our financial products, we’re owning and controlling as much of the process as possible, so the benefits go back to members.
This is commonly done overseas, with many large pension funds owning and renting homes long term.
How can you build affordable homes?
We’ve teamed up with NZ Living, owned by Shane and Anna Brealey, who have already built large numbers of homes, at affordable prices, predominantly for first home buyers selling at a significant discount to market valuation.
Shane and Anna want to provide more New Zealanders with quality rental homes, so they have effectively gifted all their resources to Simplicity.
Their expertise in building, and established subcontractor and supplier base, with our ability to fund building at scale, are a very good match.
We can build at scale, and remove significant costs. For example, we’re removing the following costs typically associated with a private housing development;
- Developer and Builder margins (we are the developer and builder, and are a nonprofit)
- Financing margin (we won’t borrow any money to build)
- Selling costs (we’ll rent to members directly, so no real estate agency fees)
- Property management margin (we’ll manage the properties directly, at cost)
What sort of homes are you building?
Initially we’ll be building 1-3 bedroom apartments, and 3-4 bedroom townhouses.
They’ll be built to last over 100 years, to HomeStar 6 standard. They’ll be very warm and dry.
The homes will be built mainly out of brick, stone, steel and timber.
Most developments will have car parks available, and typically a third of the land will be gardens and common spaces.
Here are some examples of how the initial developments could look.
Pictured: Proposed Hinaki Street development in Auckland
Who can rent the homes?
Simplicity members will have the first option to rent, followed by the general public.
What will the rental terms be?
We’ve yet to decide rental terms. But the intention is to charge more affordable rents, providing fair long term returns for investors, and housing security for renters.
Can I rent an apartment?
Not yet. We started construction in November 2021, and won’t have completed the first apartments and townhouses until early 2023.
There will be a vetting system to ensure tenants are well matched to the properties offered.
We’ll keep you informed about when you can apply, and will have regular updates on our website.
Where will you be building?
Initially we’ll start building in Auckland, where the demand is highest. Our first two communities are being built in Point England and Onehunga, totalling 159 apartments and townhouses.
Over time, we’ll look to build in other big towns and cities where there’s demand for affordable rental housing, and where we can build, own and operate at scale.
Who owns Simplicity Living, and who will manage it?
The homes will be built by Simplicity Living. Certain funds within the Simplicity KiwiSaver Scheme (not including its default fund), and the Simplicity Investment Funds, own and provide funding to Simplicity Living through a wholesale funding arrangement.
Simplicity Living Ltd has four Directors, with Shane Brealey the Managing Director.
Do you have an environmental or climate change policy?
Being environmentally responsible builders and operators is very important to us.
While we’re building out of concrete, it will be lightweight construction, with recycled material in the concrete.
Overall waste will be minimised, and we’ll recycle as much as possible (85-90%)
In addition, building for 100 years means carbon generated by renovation, re-building or demolition will be minimised.
We will be planting sufficient native trees to offset all carbon from construction, materials and transportation. A third party will verify that all carbon generated is offset.
Gardens will be watered from onsite collection facilities.
RadioNZ 1 March 2022
Kathryn Ryan interviews Shane Brealey
The Spinoff November 16, 2021
Bernard Hickey interview Sam Stubbs and Shane Brealey