Rents will rise - Greens

Monday 29 May 2017

Increasing the Accommodation Supplement could lead to higher rents, Treasury has previously advised, the Green Party says.

By Miriam Bell

Claims that landlords will be rising rents were immediate following last week’s Budget announcement that there will be an increase to the Accommodation Supplement.

Now Green Party co-leader Metiria Turei has released some 2015 Treasury advice to the Prime Minister and Cabinet who were considering an increase to the Accommodation Supplement in that year’s Budget.

In the report, Treasury officials said there is a risk that the increased subsidy will lead to an increase in rents.

The risk was present because landlords might raise rents in response to tenants being able to afford to pay more.

Turei said that raising the Accommodation Supplement might give tenants more cash in the short term but, in the current broken housing market, rents will adjust to swallow that up quickly.

“We’ve already seen landlords advising each other that with a higher Accommodation Supplement on offer, now is a good time to raise rents.

“Unless the Government commits to building thousands more affordable houses, the Accommodation Supplement is really just a subsidy flowing straight to landlords."

The Government should instead be building houses, she said.

However, the idea that rents will automatically go up in line with an increase in the Accommodation Supplement doesn’t hold much traction in some quarters.

The 2015 Treasury report itself said there was no clear consensus on the degree to which raising the Accommodation Supplement might result in high rents generally.

It also recommended that the Accommodation Supplement should be increased.

Prime Minister Bill English told media today that they were focused on families, not on landlords and it would be worse not to increase the supplement.

He has been advised that the Ministry of Social Development researched it and couldn't find any evidence that when it was last changed in 2005 that increase went to landlords rather than families.

Landlords are restrained by the market and don’t have the option of just banging up the rent to any number they can think of, he said.

NZ Property Investors Federation executive officer Andrew King agreed.

He said that when the Accommodation Supplement has been raised before there has not been a corresponding increase in rents.

“Landlords don’t get Accommodation Supplement money directly. Rather it is received by the tenants,” King added.

Both the Green Party and the Labour Party actually support the increase to the Accommodation Supplement but feel it is problematic.

Both parties have extensive housing building programmes as a key part of their housing policy packages.

The Government also recently announced a house building programme for Auckland, which will see the development of 34,000 new houses.

Read more:

Budget boost for tenants 

Super City to get 34,000 new houses 

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

SuperCity sales defy expectations – for now

Auckland’s property market defied economic forecasts in June but that doesn’t mean it will continue to do so, according to the city’s largest real estate agency.

House Prices

S&P forecast 10% house price fall

Global ratings agency Standards & Poors is the latest to join the chorus of predictions around potential house price falls in New Zealand – and they’re picking a 10% drop.


$75m on offer for new developments

Auckland ’s long-term future is sound as well situated residential developments will always sell and demand for affordable housing remains strong, a leading non-bank property financier says.


Mortgage borrowing rebounds in May

New mortgage borrowing rose by roughly $1.6 billion in May as the property market showed signs of recovery from the Covid-19 lockdown.

Site by PHP Developer