Private landlords may be big winners in Govt plans

Prime Minister John Key has said the Government could choose between building 1000 houses at a cost of $500 million or offering 1000 IRRs for third-sector social housing providers at a cost of $12 million.

He said it would be quicker for the Government to get social housing providers offering the homes.

The Government would also extend the IRR subsidy which caps rent at 25% of income. Until recently it was limited to tenants in state houses and those in private accommodation received the accommodation supplement.

Labour said an extension of the IRRs would be a transfer of wealth to private landlords, which would drive up rents for all tenants.

Housing spokesman Phil Twyford said vulnerable families would have to compete with other renters and it would make the housing market harder to get into. 

Green Party housing spokesman Kevin Hague also panned the plan.

“The Government paid out $1.2 billion via the accommodation supplement in the year to June 2014, a policy that is already credited with driving up rents. The provision of state houses by the Government delivers a supply of affordable accommodation. A good supply of rentals at a reasonable rate helps contain rents for everyone, not just those in the state house. That function no longer applies when our stock of state houses are sold.”

He said: “Rents will be driven higher, and while families with rent subsidies may be assisted short-term, the Government will be on a treadmill to pay ever higher subsidies as house price-related rents increase.