Focus on supplement misses the point

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Politicians claiming the accommodation supplement is lining the pockets of landlords seem to have forgotten one key point: There is a massive property shortage in New Zealand, and in Auckland in particular.

Wednesday, July 18th 2012, 12:00AM 6 Comments

by The Landlord

House prices  - and rents - are going up because there are not enough houses being built to keep pace with demand.

To suggest that removing the accommodation supplement would cause rents to drop is naïve.

There’s no doubt the supplement is helping some tenants into houses that without it, they could not afford.

But there won’t be a massive decrease in rental demand if it is removed, forcing landlords to drop their rents. The only thing that will happen is that the country’s most vulnerable will find they are priced out of the market.

Caravan parks, like the one Paula Bennett accused this week of being expensive and substandard, will become the only option for low-income families looking for a place to rent.

Labour spokeswoman Annette King wants more, better quality rental properties, which is an admirable aim.  But this is not the way to get it.

House prices will still be out of reach of most low-income earners. Without the accommodation supplement, many rents may be too.

It is fair to say the money spent on social housing and supplements such as the accommodation supplement should be reviewed, to ensure it is being spent wisely. It’s billions of dollars.

But to say that removing the supplement will result in better, cheaper rentals for tenants, is wrong.

The Government needs to be looking at the real issue – the lack of available housing and the massive costs of property ownership. The earthquakes in Christchurch, the leaky building problems in Auckland and our increasing population mean more houses need to be built – and fast.

ACT leader John Banks is right that many property owners are feeling the squeeze of ownership costs – a drop in those would allow them to spend the money needed to improve their rentals to the standard King is calling for.

Freeing up land to build on and making it a much less arduous regulatory process will make housing affordable in a way that tinkering with the accommodation supplement could never hope to.

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