Operating Supplement

The Operating Supplement is one of the ways Te Tūāpapa Kura Kāinga - Ministry of Housing and Urban Development (HUD) provides funding to Kāinga Ora – Homes and Communities and Community Housing Providers (CHPs) to build more public housing places.

About the Operating Supplement

The Operating Supplement is a funding subsidy paid in addition to the Income-Related Rent Subsidy for eligible net new public houses to help enable new build supply. The Operating Supplement is calculated as a percentage of market rent up to a percentage cap.

In Auckland, Hamilton, Tauranga, Wellington and Christchurch the Operating Supplement cap is 90 percent of market rent.

In all other locations the cap is 100 percent of market rent.

The higher cap for locations that generally have lower market rents means that new public houses can be delivered that otherwise might not have been financially viable.

Early-stage Operating Supplement funding

CHPs might be eligible to receive early-stage payments of the Operating Supplement (early-stage funding) for new public housing developments that will be delivered before July 2024.

Early-stage funding enables a portion of Operating Supplement funding that would otherwise be paid out to providers over the length of their contract with HUD to be paid in the development and construction stages of a new build project.

This funding is available to support new developments that might otherwise take longer or not go ahead, including where a CHP has a portion of the development capital required but needs a top-up.

Proposals to access early-stage funding will be assessed on a case-by-case basis and we encourage CHPs to continue to work with us on all new development opportunities.

To be eligible to receive early-stage funding, a proposal must demonstrate at least one of the additionality criteria.

See the criteria on our Partnering for new housing opportunities page.

In addition, both of the following criteria need to be met:

the development must be build-to-own (as opposed to build-to-lease), and
all other sources of funding have been explored by the CHP (such as bank finance and other sources of Crown support).