Accommodation supplement not fuelling rent rise - report

File image.

A report commissioned by the Government has found landlords are not hoovering up accommodation supplement increases by hiking rents, and yet low-income Kiwis are still paying more in rent than anywhere else in the OECD.

In 2018, the accommodation supplement was increased as part of Families Package changes and the Government recently commissioned the independent research institute 'Motu' to investigate whether it had led to rent increases, as international research had suggested such payments do.

The accommodation supplement is a payment which helps families on low and middle incomes cover their housing costs if they meet certain income and cash-reserve criteria.

Motu found the 2018 increases did not go to landlords via an increase in rents charged to tenants, and that two years after the changes "around 90 per cent of the extra increase in assistance was kept by accommodation supplement recipients as an extra increase in after-rent income".

Motu said the supplement increases did not appear to be an important driver of the long-term growth in rents that was occurring.

"Instead, it appears trend increases in rents started two to three years before" the accommodation supplement increased in 2018 and a previous increase in 2005.

Social Development Minister Carmel Sepuloni was pleased with the finding.

“Long-term trends show no evidence of rents for accommodation supplement recipients increasing faster than overall rents for new tenancies following the Families Package changes," she said in a statement.

Yet, a report in November 2021 by the Ministry of Social Development again highlighted the extent of the housing crisis.

The Ministry found that more than 60 per cent of low-income renters in New Zealand in 2018 were spending more than 40 percent of their income just covering the rent - the worst ratio in the OECD.

And for low-income households with mortgages - 17 per cent were spending more than 40% of their income covering the mortgage - again the highest rate in the OECD.

SHARE ME

More Stories