Figures obtained through the Official Information Act shows the Government is spending over $27 million a week helping 292,006 people who are struggling to afford private rentals.. This is up from $20 million a week from last year. Women, senior citizens and Māori are amongst the groups more likely to receive accommodation supplement, and the majority of recipients are on some form of benefit. Auckland Action Against Poverty is calling for a freeze on rent increases, and for the Government to invest in building more affordable public housing so that it does not have to spend dozens of millions of dollars each week subsidising wealthy landlords profiting from an unregulated private market.
“The lack of public housing and regulations on rent prices has meant too many New Zealanders are struggling to cover the cost of rent. Landlords are able to exploit an unregulated rental market and lack of public housing, increasing rent prices to match any increase on wages or welfare assistance’, says Ricardo Menendez March, Auckland Action Against Poverty Coordinator.
“The Government is effectively using taxpayer money to subsidise high rents imposed by greedy landlords. Without a plan to stop the rising cost of rents, the accommodation supplement expenditure will only continue to skyrocket. “We are calling on the Government to legislate to freeze rent prices, and then decrease them until they match affordability standards that are no more than 30% of people’s weekly incomes.”
“The current Residential Tenancy Act has no provisions to cap the amount by which rents can increase by, or sets a maximum reasonable rent price in relation to income in New Zealand for private rentals. The Government has an opportunity to transform the lives of hundreds of thousands of tenants who are currently at the mercy of high rent prices by amending this piece of legislation.
“Stats New Zealand reported last year that people on the benefit were the most affected by the rising cost of rent, with some of the beneficiaries we see at Auckland Action Against Poverty spending over 60% of their income in rent. In the current market, even if the Government increased baseline benefit levels or the accommodation supplement, landlords could simply match that with equal rent increases.
“The social housing waiting list continues to get larger, while the net increase of state homes has only marginally increased. In South Auckland alone, the state housing stock is only due for a net increase of around 300. For many people receiving the accommodation supplement because of their high rents, access to state homes would provide an affordable solution for both the tenant and the Government in the longer term.
“The accommodation supplement does not address the core issues behind the housing crisis. The Government needs to urgently intervene in the housing market if it doesn’t want a growing portion of its budget going into paying landlords. It is bad fiscal management to be spending huge amounts on a patchwork approach to addressing housing affordability, and putting the burden on taxpayers while a few landlords profit.
It makes more sense to freeze the accommodation supplement as it is the government costs.
Rental yields are below putting the money in the bank. With Capital Gains taxes and freezes on negative-gearing, there will be fewer landlords in the near future.
If the government disincentivizes the private sector, it should take more responsibility. Then, the government is obliged to build more social housing and managing their stock.
Kiwibuild should be for social housing and not subsidizing the middle-class.
But does it make economic sense? Save hundred of millions from ceased tax-breaks but spending Billions in buidling houses and hundred of millions in management costs.
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