There is a big need for more community housing in our country – but how do Community Housing Providers get set up? What is the process to actually become a registered Community Housing Provider? These are the common questions we get about Community Housing Providers, and we will provide answers to the first question in this article, and then set out how to register in a second article.
What is a Community Housing Provider?
A Community Housing Provider (CHP) is defined as an entity who provides housing for the purpose of either community rental housing or affordable rental housing, or both.[1] Tenants of these homes will be those who have registered themselves as in need of a home on the Ministry of Social Development’s Public Housing Register, provided the CHP is registered by the Community Housing Regulatory Authority (CHRA).
There is some good news in that there is flexibility when it comes to the legal form these can take. A CHP can be set up using various structures, such as a company, a charitable company, a trust, or a limited partnership, provided their purpose satisfies this definition.
We can provide you with advice as to what structure best suits your situation. You may also wish to look at our Community Housing – A Legal Guide for more information.
Why would an entity want to become a Community Housing Provider?
One clear benefit of being a CHP is knowing that you are helping those in need by building and providing housing. Rather than investing in a term deposit or other ventures which may be purely focused on return on investments, providing rental housing for those facing difficult situations helps to better the community.
There are other benefits if you are registered as a CHP by the CHRA. Financially this can be beneficial because:
- By being a registered CHP, the Ministry of Housing and Urban Development (HUD) provide an Income-Related Rent Subsidy to registered CHPs through reimbursement agreements and tailored agreements.[2] This covers the difference between the amount of rent the tenant is to pay (as determined by the Ministry of Social Development) and the market rent of the property. This ensures that you will not be disadvantaged by providing affordable rental housing to those in need.
- A registered CHP may also get an income tax exemption. To do so, they must meet the eligibility criteria (which is discussed below), are a trust or company, and are not carrying out activities that are for profits or personal gain. The registered CHP must also not have more than 15% of its beneficiaries or tenants with an income or total assets that exceed particular amounts. These amounts are specified within Schedule 34 of the Income Tax Act 2007 (ITA). It must be noted that only the income limit will apply to the tenant if they have not owned land before, meaning their asset value can exceed the limits stated in the ITA.
We help many community housing providers and could help you as well – check out our information at our information hub here.
If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, judithbullin@parryfield.com or paulowens@parryfield.com at Parry Field Lawyers.
This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.
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[1] Public and Community Housing Management Act 1992, s 2.
[2] Public and Community Housing Management (Community Housing Provider) Regulations 2014, s 4(1).
