Supplement not keeping up with rents
Families are facing ‘stress’ and ‘hardship’
Struggling families are facing “financial stress and hardship” because the Government’s Accommodation Supplement has failed to keep pace with soaring rents.
The supplement, a weekly payment that helps people with their rent, board, or the cost of owning a home, has not changed since 2018 when the median weekly rent in Tauranga was $495. That number skyrocketed to $630 in 2022. In Rotorua, rents jumped from $375 to $520 over the same period.
The Government has acknowledged more needed to be done to improve the accommodation supplement and it is under review.
Social agencies support raising the supplement but there are concerns it could add further inflationary pressure to the market or benefit “opportunist landlords”.
Supplement amounts vary between regions with the country split into four areas, based on market rents.
People living in places deemed Area 1 could qualify for the highest maximum accommodation supplement rate, while those living in Area 4 may qualify for the lowest maximum rate.
Tauranga alongside Auckland is in Area 1 so a single person on a benefit with two children can receive a maximum of $305 a week.
In Area 3, which includes Rotorua, the same person would get a maximum allowance of $160 a week. Rates could vary depending on what other type of support a person is receiving or their income.
Ministry for Social Development group general manager client service delivery Graham Allpress said the different rates reflect the fact that those in high-cost areas may require more financial support than those living in areas where the average accommodation costs were lower. Before changes to the accommodation supplement in 2018 it had not changed for 13 years.
Social Development Minister Carmel Sepuloni said the Government recognised more needed to be done to improve the accommodation supplement.
“This is why, as part of our ongoing work programme to overhaul the welfare system, we have explicitly agreed to review it. This review is under way.”
Bay Financial Mentors manager Shirley Mccombe said some of its clients were taking on rents they could not afford.
“Then they are not able to meet the ongoing cost and face eviction.
‘‘They also are unable to buy food, petrol, pay insurance, and so on.”
Increasing the accommodation supplement was something many people had been asking for.
“It is not just the amount of the allowance, but also the levels at which people become entitled to support that needs to be addressed.
“However, it is not as easy as it sounds because increasing the number of people eligible (and the amount they can receive) can create inflationary pressure and drive up the rental market – especially when supply is so low.
“It is the tightrope the Government walks.”
Tauranga social service agency Te Tuinga Whanau executive director Tommy Wilson said the accommodation supplement could be a hindrance as much as a help.
In his view, any increases could end up in the hands of “opportunist landlords”.
“I have concerns that any increases end up in the pockets of those that least deserve it. ‘‘Somehow we need a filter to make sure those increases get to the people who need it the most.” Rotorua Budget Advice manager Pakanui Tuhura said the issues around unaffordable/ inappropriate housing were bigger and more complicated than they had been for years. “Until we have large stocks of affordable, appropriate and welllocated rental accommodation available, the landlords will set the rental rate at what they think is appropriate for their asset. To me, the current rental market is a landlord market. “Those tenants with good relationships and long-term rental agreements will continue to absorb rental increases as they don’t want to relocate to somewhere worse.”
In Tuhura’s view, he did not think there was a loser or winner.
“To me, it is more about current tenants considering their current accommodation as appropriate and affordable, and those seeking accommodation as to whether or not affordable accommodation is in fact appropriate.”
Salvation Army social policy analyst and advocate Ana Ika said the cost of housing continued to create “financial hardship” for many of the families it supported.
It wanted the accommodation supplement updated to match the current rental market, Ika said.
“The current accommodation supplement areas are outdated.
‘‘They were set in 2017 and many areas which were considered rural are now urban with urban rental prices.
“The misclassification of these areas means many are not able to access maximum accommodation supplement payments. We would like to see the geographic areas of the accommodation supplement updated to match the current rental markets in each area.
“The current accommodation supplement was set based on the average rents in 2016—there has been a 40 per cent increase in rent since 2016.
‘‘Additional support for people particularly in our rental market would definitely help support individuals and families who are struggling financially and help them to sustain their tenancies.”
Retirement Commission policy director Dr Suzy Morrissey said the accommodation supplement was an important benefit for those facing high housing costs on lower incomes.
Eligibility criteria apply, beyond income and how much is spent on housing.
There was the “cash asset test”, which referred to cash and similarly readily available assets, but not to larger assets such as a house or funds that were “locked away” in Kiwisaver.
The cash test has a maximum limit of $8100 (per person) and last year the Retirement Commissioner called for this to be increased because it hadn’t been changed since it was introduced in 1993, Morrissey said.
‘‘This is particularly important for the over 65s, as their Kiwisaver is no longer ‘locked away’, as they can now access it. That makes it harder for the over 65s to be eligible for the accommodation supplement and can leave them in financial stress when their housing costs are very high relative to their income.”
Data from the Ministry of Housing and Urban Development reveals in October 2022 there were 23,651 people on the housing register compared to 24,910 in October 2021. Over the same timeframes, there were 2402 in the Bay of Plenty compared to 2271.