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Research and Policy

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• Online version - New Zealand Housing Strategy
  • Online version - New Zealand Housing Strategy - Foreword
  • Building the Future
  • Programme of Action
  • Area 1 - Sustainable Housing Supply
  • Area 2 - Assistance and Affordability
  • Area 3 - Homeownership
  • Area 4 - Private Rental Sector
  • Area 5 - Housing Quality
  • Area 6 - Sector Capability
  • Area 7 - Meeting Diverse Needs
  • Appendices - Principles
  • Appendices - Glossary and Acronyms

Research and Policy

Area 2 - Assistance and Affordability

Adequate housing is fundamental to the health and well-being of families and communities.For this reason all New Zealanders must have access to quality, affordable housing.

The New Zealand housing market successfully caters for the housing needs of about 90% of New Zealanders.Where the market does not adequately provide, Government will work with community organisations, local government, iwi and other agencies to improve the delivery of social housing for low and modest income families in all areas of the country.

State housing is central to meeting the housing needs of those requiring direct assistance and will remain at the core of Government assistance.

Affordability is not simply a matter of housing costs and income levels; it is also about people's ability to obtain housing and to stay in it.

Housing needs to be more affordable for low and modest income households.The Government will invest in state housing, review the Accommodation Supplement and develop new models of assistance in partnership with community-based and private sector organisations.

Housing Assistance

It is important that people are able to buy other necessities after paying their housing costs.Affordability typically becomes a concern when the housing costs of households in the lower 40% of the income distribution exceed 25% to 30% of their income.[i]Consultation feedback suggests that households in the middle as well as lower income ranges are increasingly experiencing affordability problems.With readily available credit, household debt can affect people's ability to get into and stay in adequate housing.

There was widespread support for increasing investment in government and social housing stock and funding new houses to alleviate demand pressure and affordability problems in local markets.Many submitters felt the best way to achieve this was through collaboration and partnerships.[ii]

To improve affordability, the Government provides two major forms of assistance:

state housing and income-related rents that give priority to those in greatest need the Accommodation Supplement for those whose housing costs are considered too high to be met through their income alone.
The Government provides direct housing assistance to around 64,000 households in the form of a state house coupled with an income-related rent for those households who qualify, and indirect assistance to around 249,000 people who receive the Accommodation Supplement (2003/04 figures).Changes introduced as part of the Working for Families package under Budget 2004 are expected to expand this assistance to around 278,000 families by 2007/08.

The Role of State Housing

The Government will continue to build up the state housing stock thereby reducing waiting times, particularly in Auckland.Between 1999 and 30 June 2005, the Government expects to increase state house numbers by more than 4,800.The Government is committed to adding more.By 2007, HNZC will build, buy or lease at least 2,000 more state houses, the majority of which will be in Auckland.

Consultation feedback during the Strategy's development reinforced the importance of state housing for those in greatest need, but questioned whether all tenants should regard it as a 'home for life'.It was suggested that supporting those able to move on once their circumstances had stabilised would ensure state houses continue to be made available for those in greatest need.

Reviewing the Accommodation Supplement
We will review the effectiveness of the Accommodation Supplement as it may not be the most effective form of assistance for households who rent.While it meets their immediate need for help with rent payments, it doesn't help them to move ahead financially.It may support high rents and work against those with homeownership aspirations, although limited research has been done to date (May 2005) on this question.

The Working for Families package announced in 2004 significantly increased the Accommodation Supplement rates from 1 April 2005.Locations with higher accommodation costs have been placed in Accommodation Supplement areas with higher maximum rates.These changes have gone some way towards improving the situation for families, but questions remain about the overall effectiveness of this form of housing assistance.The review will explore these in greater depth.

A proposal put forward during consultation was to pay the Accommodation Supplement directly to landlords on behalf of tenants, particularly in the not-for-profit sector.Third sector providers saw the potential of this as a way of supporting the provision of affordable housing.

Affordability is linked to wider economic factors such as employment, wage levels, and house prices and rents, while high rents (relative to income) are a key barrier to buying a house for many people.[iii]

New Ways of Assisting

Government recognises that state tenancies and the Accommodation Supplement alone cannot meet the increasingly diverse housing needs of lower income households.

Supporting alternative social housing providers offers social and economic benefits. Social benefits include improved services for specialised groups, and pooled resources and expertise.Economic benefits include the ability to attract investment from local government, private partners, and community-based organisations.Social housing has the potential to be a significant area of social investment for philanthropic trusts, socially-oriented businesses and local government.[iv]

Government is also keen to explore other promising social housing models with local authorities that may be struggling to manage housing portfolios, including the possible development of joint venture housing organisations and trusts.Assistance for landlords with social objectives, and alternative models of ownership and management such as co-operative housing could also be considered.

The Housing Innovation Fund and the Local Government Fund are an important step towards growing the social housing sector.The funds aim to encourage community-based organisations, iwi and local government to expand their role as providers of sustainable, long-term housing, by offering loans and advisory support.

A third sector organisation, Community Housing Aotearoa Incorporated Nga Wharerau O Aotearoa (CHAI) was established in October 2004 to connect, support and represent community-based organisations throughout New Zealand that provide housing to people on low incomes or with special needs.CHAI will provide leadership to the sector, networking opportunities for those involved in providing housing so that they can learn from each other, and practical help such as model documents, best practice guidelines and help with legal matters.

Emergency Housing

We will review funding policies and support for emergency housing.There is growing demand (particularly in Auckland) for emergency accommodation to meet the immediate needs of people in housing crisis.There is also a shortage of appropriate and affordable long-term housing for people moving out of emergency accommodation, and a lack of services for single people.

Staging and Priorities

Improving housing assistance and affordability requires balance between demand-side assistance (such as the Accommodation Supplement) and supply-side initiatives (such as the provision of state housing).Government believes that this balance will continue to be required, but it recognises that the mix may require adjustment over the coming decade.The Government will review whether the Accommodation Supplement is still an effective way to provide housing assistance.

Housing assistance and affordability initiatives encompass existing and new models of housing assistance.

In the short term, the emphasis will be on:

• increasing the number of state houses and continuing to modernise existing stock
• reviewing the effectiveness of the Accommodation Supplement (including accommodation assistance for students and young people, and
• the possibility of allowing Accommodation Supplement payments directly to landlords)
• supporting the expansion of social housing through the Housing Innovation Fund and the Local Government Fund which provide
• assistance to community-based and local government housing providers
• investigating demand and developing clearer funding policies and initiatives to support emergency housing.

In the medium to long term, emphasis will be given to:

• exploring opportunities to encourage large-scale, third sector housing providers new ways to grow the third sector, such as trusts to strengthen local authority housing provision
• creating incentives for non-government investment in social and affordable housing.
• Government initiatives to improve housing assistance and affordability are set out below.

Further initiatives within Government's housing assistance and affordability work programme are outlined in the table opposite.

[i] In September 2004, 18,400 or 13% of private tenants receiving the Accommodation Supplement had housing expenses that exceeded 50% of household income.

[ii]Gravitas Research and Strategy Limited 2004, Building the Future: Towards a New Zealand Housing Strategy, analysis of public meetings and submissions received on discussion document, prepared for Housing New Zealand Corporation, p. 28.

[iii]Gravitas Research and Strategy Limited 2004, Building the Future: Towards a New Zealand Housing Strategy, analysis of public meetings and submissions received on discussion document, prepared for Housing New Zealand Corporation, p. 24.

[iv] In Canada, for example, not-for-profit housing co-operatives accommodate nearly a quarter of a million people in 90,000 housing units established in the 1970s and 1980s through federal government funding programmes.In England, the 'right to manage' concept allows public housing tenants (in 25 or more dwellings) to take collective responsibility for aspects of tenancy and property management, while ownership of the housing remains with a local authority. (C Johnston and J Lumsden (2004) Tenant Management, co-operatives and public housing, pp. 27 and 36.Association to Resource Co-operative Housing, Darlinghurst NSW.)