Covid-19 and a "no evictions" policy for misbehaving tenants are being blamed for an explosion in unpaid Kāinga Ora rent - and cash-strapped taxpayers are footing the ballooning $9 million bill.
When Labour came to power in 2017, the nation's state housing tenants owed nearly $750,000 in unpaid rent.
But figures obtained by the Herald under the Official Information Act show that soared to nearly $9 million last year.
The five largest state house rent debts total more than $115,000.
About 12 per cent of Kāinga Ora households are now behind on their rent.
The agency blames clients' worsening financial predicaments on the Covid-19 pandemic, as many experience "significant life events" such as loss of employment.
But the jump in overdue rent also coincides with a "sustaining tenancies" policy introduced under the Labour Government, which has resulted in just three Kāinga Ora tenants being evicted since 2017.
The controversial policy aims to work closely with vulnerable tenants to address the root cause of their problems rather than turfing at-risk clients on to the street to be recycled through emergency housing.
Critics claim it has emboldened the most antisocial members of society to terrorise innocent neighbours, or others to ignore their financial obligations, without fear of losing their taxpayer-funded home.
National's deputy leader and housing spokeswoman Nicola Willis said the big jump in overdue rent highlighted the soaring cost of living associated with rising inflation, grocery bills and petrol costs.
"It's a reflection of the cost of living crisis when state house tenants can't meet their most basic obligation."
But there were other issues at play when so many tenants couldn't afford their heavily subsidised rent, usually set at 25 per cent of their income, she said.
She blamed the Government's "no evictions" stance, which she claimed had resulted in Kāinga Ora going soft on violent and abusive tenants who could intimidate neighbours but still enjoy the privilege of a state house.
"I think having the Minister [Poto Williams] stand up in Parliament and defend a policy that means no one could have a state house tenancy terminated, no matter what they did, was a very dangerous signal for her to make.
"It has emboldened people to think that there is not going to be a consequence for their actions.
"Living in a state house is a privilege. The Government needs to be clear that tenants have obligations just like anyone else does. This includes respecting neighbours, following laws and paying the rent."
The single largest overdue rent bill is $24,996 for a Kāinga Ora property in Lower Hutt, which has been accrued since October 2017 - the same month Labour was voted into power.
It is not known how many antisocial tenants accused of abusing neighbours are also responsible for unpaid rent.
Kāinga Ora government relations manager Rachel Kelly said she could not disclose the exact steps being taken to recoup the largest debts, but said those families had been badly affected by the pandemic.
"Kāinga Ora is continuing to work with each household to understand their financial situation and support them to access budgeting services to ensure sustainable arrangements are made to repay rent arrears."
Most of the agency's 200,000 customers were good tenants who paid their rent on time. The $8.8m currently owned made up only 2.4 per cent of the total amount paid in rent each year.
"However, we acknowledge financial obligations can be a complex and sensitive topic for some of our customers. Collecting on rent debt can take time and needs to be handled with respect and compassion."
The pandemic had affected clients' ability to pay rent, and Kāinga Ora staff's ability to collect it, Kelly said.
The agency had introduced "a new set of principles for conversations on rent debt" and new repayment thresholds to ensure repayments were sustainable. It continued to work with customers who were behind on their rent to help them achieve financial wellbeing.
A Herald investigation last year revealed that scores of innocent Kiwi homeowners and tenants were facing intolerable intimidation and abuse from antisocial Kāinga Ora clients, sparking claims official were powerless to move the offenders on due to an edict to sustain tenancies.
After intense public pressure and talk of a class action, Williams ordered a review of the policy and the agency announced a suite of new measures this year, including a three strikes regime under the Residential Tenancies Act to address the most severe behaviour.