Thousands of tenants who can't afford all their rent receive an accommodation supplement from Government.
Thousands of tenants who can't afford all their rent receive an accommodation supplement from Government.
The state is helping 364,000 tenants and mortgage holders who can’t afford where they live, paying $2.34 billion annually so they can afford housing, and one minister is asking if this is sustainable and fair.
People who can’t afford all their rent, boarding house costs - and evenmortgages - get the Government’s accommodation supplement which Treasury said stood at $2.34b in the latest year.
After an Official Information Act request from the Herald, the Ministry of Social Development’s general manager for ministerial and executive services Magnus O’Neill released the numbers of recipients of the accommodation supplement for the year to January 31, 2024:
258,885 recipients in rental accommodation got 71 per cent of the total supplement;
68,778 recipients in boarding accommodation got 18.9 per cent of the total supplement;
36,630 mortgage holders got the final 10.1 per cent of the total supplement.
A spokesman for the Treasury said the state paid $2.3b in the supplement in the year to June 2021 but that rose 3 per cent to $2.38b in the year to 2022, then dropped to $2.34b in the June 2023 year.
Social Development and Employment Minister Louise Upston said: “It’s right that the accommodation supplement exists as a safety net for those who are really struggling, but there is merit in considering whether the current settings are fair and sustainable long-term.”
Minister Louise Upston hints that changes could be afoot for the accommodation supplement.
The coalition Government was concerned about the state of the rental market it inherited from Labour, she said.
“It’s not surprising that the proportion of tenants that require financial help from the ministry to pay their rent has also increased. This is why ministers across the coalition Government are working hard to drive downward pressure on rents and put more money into Kiwis’ pockets,” Upston said.
“We’ve already moved to turn things around through changes such as restoring interest deductibility for rental properties, restoring the bright-line test to two years, and reversing Labour’s removal of no-cause terminations to bring more landlords and rental properties back into the market.”
The way the system works in New Zealand is that Work and Income, part of the Ministry of Social Development, pays the accommodation supplement as a weekly payment to assist with rent, board or home ownership costs.
How much people get depends on their income, assets, accommodation costs, family circumstances and where they live.
This payment is not taxed.
All of the rental accommodation supplement goes to private landlords: tenants who can’t afford the entire cost of where they live get the state help, then those tenants pass that state subsidy across to their landlord via their weekly rent.
No Kāinga Ora tenants living in the state’s approximately 72,0000 residences get the supplement.
The Herald has previously reported how New Zealand has a record number of residential rental properties according to data from the Government’s Tenancy Services, supplied via the Ministry of Business, Innovation and Employment (MBIE).
That showed a big upswing in the number of active rental bonds deposited and indicates more places are being rented.
By November 1 last year, active bonds were lodged on 410,904 residential rental properties: townhouses, apartments, flats, units and stand-alone homes. That’s up 38 per cent from 2010 when 297,624 active bonds were lodged.
The 2018 Census showed more than 1.4 million people live in rental housing.
Herald multimedia journalist Julia Gabel compiled the above chart showing the rising numbers.
Bonds are held to cover unpaid rent, damage to a property or any claims but tenants who have looked after a place, paid rent and any other amounts owing should get a refund of their bond when the tenancy ends, Tenancy Services said.
“At present, Tenancy Bond Services holds more than $820 million of bond money in the Residential Tenancies Trust Account,” the Crown entity said.
An MBIE spokeswoman said the ministry did not have information on the exact number of tenants in this country.
Data from StatsNZ shows the estimated number of rented dwellings in the December 2023 quarter was 663,700, according to the dwelling and household estimates, published on January 11.
The 258,000 tenants receiving the rental accommodation supplement amounts to 39 per cent of the 663,700 dwellings rented in New Zealand.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
