Kāinga Ora cracks down on rent debt, halves outstanding amount

By Susan Edmunds of RNZ

Kāinga Ora is preparing to take a tougher line on rental debt.

But as it changes its approach, the government housing agency will also write off about half of what is outstanding, in part because it says it partly contributed to the problem.

Chief executive Matt Crockett said the total amount of rent debt had fallen from $21.6 million in January last year to $16.1m this year.

But Crockett said while progress was being made, it was not as much as Kāinga Ora would like and it was setting a 12-week limit on how much rental debt a tenant could be allowed to accumulate.

He said more needed to be done and Kāinga Ora was going to take a firmer approach with those who fell behind.

“We will continue to support households who fall on hard times but are making genuine attempts to get back on track with their rent. We’re a social housing landlord so that’s the right thing to do.

“But, through our new rent debt policy, we are drawing a line on how patient we can be. We don’t want to end tenancies, but we will if tenants are not meeting their obligations to reduce their rent debt, are skipping rent payments or refusing to work with us.”

Crockett said the new approach would mean tenants would not be able to have accumulated more than 12 weeks’ rent debt when their tenancy ended. Action would be taken as soon as a payment was missed, he said.

“The timing will look different in each situation, depending on a range of things, including the tenant’s engagement with us and whether they are making meaningful steps to address their debt.

“We expect tenants to work with us and make genuine attempts to get back on track with their rent. If this doesn’t happen – and we’ve done everything we can as a landlord – we will apply to the Tenancy Tribunal to end the tenancy.”

About 3% of Kāinga Ora tenants had more than 12 weeks' worth of rent debt, he said. The tenant with the largest debt had more than $40,000 owing.

As part of the change in approach, those who were making repayments on their debt and paying their rent on time would have their outstanding amounts reduced to a more realistic level, he said.

Chief executive Matt Crockett said Kāinga Ora was going to take a firmer approach with those who fell behind on rent. Photo / RNZ, Marika Khabazi

That was likely to mean $8.3m of the $16.17m owing would be forgiven.

“This is already provisioned for on our balance sheets as it is regarded as doubtful debt, so there will be no impact on our financial performance.”

Crockett said the likelihood of collecting the debt was already low. It had arisen in part because of Kāinga Ora’s previous approach.

“During the pandemic, the steps we took to respond to government policy meant we didn’t chase debt in the way we normally would, so we carry a measure of responsibility. We’re being pragmatic. We think we’re better off focusing on recovering the remaining debt faster and ensuring current tenants do not get into too much debt.

“And you can imagine that, you know, our tenants are typically low-income people with a number of challenges in their life, and that would look like a daunting challenge to anyone, and it just takes out the incentive. You can imagine they get to the point of like, ‘oh, why bother? I owe that much money’.

“It’s a big issue for our tenants. It’s a big issue for us, and I think we’re putting in this policy to try and get that back under control and bring more clarity to the way it will work moving forward.”

Crockett said it was easiest to collect the debt from people while they were still in the properties.

“Once their tenancy is terminated, it becomes much, much harder to try and pursue that debt and we don’t want people needing to be removed from their houses.”

He said most Kāinga Ora tenants paid income-related rent, set by the Ministry of Social Development (MSD) and reviewed each year.

“Paying an income-related rent means the rent a customer is charged each week is typically no more than 25% of their income. However, in some situations a tenant may be charged a market rent instead – for example, if MSD does not receive the information needed from a tenant when their income-related rent is reviewed.”

– RNZ