Subsidy boosts don’t mean rent hikes

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Allegations about the behaviour of landlords has led the New Zealand Property Investors Federation to come out swinging.

Wednesday, January 25th 2017, 10:00AM 1 Comment

by Miriam Bell

The housing market may have cooled down in recent months but affordability concerns continue to dominate public discourse.

These have been heightened by the recent release of this year’s Demographia Housing Affordability Survey which ranked Auckland as the fourth least affordable housing market of 92 surveyed.

It follows hot on the heels of Statistics New Zealand data which revealed that home ownership is at its lowest level since 1951.

Meanwhile, Trade Me Property’s latest rental price data has showed median weekly rents are up nationwide.

These factors prompted Monte Cecilia Housing Trust chief executive Bernie Smith to tell the media of his anger at property speculators who flip houses, bump prices up and lock people out of home ownership.

Smith also said that some long-term landlords were not much better as they increased their rents when the government increases housing subsidies.

However, the NZPIF has rejected Smith’s accusations against landlords because housing subsidies are paid directly to the tenant - not the landlord.

NZPIF executive officer Andrew King said the accusation was an inaccurate claim that attempted to paint landlords as villains.

"Private landlords usually have no idea if their tenants are receiving a housing subsidy or not, let alone whether it has been increased."

The accusation is one that has been made often in the past and is simply not true, he said.

“But if something gets repeated often enough people believe it and they don’t look at what is really happening.”

King said that the Green Party has previously called for the removal of housing subsidies on the grounds that they drive up rents and that without them rents would drop.

“Rents probably would drop if subsidies were removed, but not by much.

"And it would be because tenants would end up moving into cheaper, overcrowded accommodation which would impact on demand.

“Such a situation would just create more hardship for already struggling families.”

Renting a home tends to be cheaper than owning a home in New Zealand.

According to an NZPIF study, in December last year it was nearly $10,000 a year cheaper to rent than own a home, which equates to a saving of $104 per week over home ownership.

King said that while rents may have gone up slightly in recent months, they have remained largely flat over the course of the current housing boom.

“If it was true that landlords put up rents whenever housing subsidies go up, then rents would, in fact, be higher than they are now.”

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