About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, November 21st, 9:48PM
rss
Latest Headlines

COMMENT: Ditching Accommodation Supplement not the answer

Tenant advocates have long claimed the Accommodation Supplement benefits landlords over tenants but those demanding it be scrapped are ignoring some relevant facts, says NZ Property Investors Federation executive officer Andrew King.

Wednesday, June 12th 2019, 10:53AM 1 Comment

In a recently released report, “The Accommodation Supplement: The Wrong Tool to Fix the House”, the Child Poverty Action Group (CPAG) has called for the Government to remove the Accommodation Supplement (AS).

Instead of having the AS, the CPAG wants the Government to significantly raise the incomes of all benefit recipients and low-wage workers.

The CPAG claims that the AS is a significant government subsidy of the private rental market and keeps rental prices high.

However, the CPAG’s own report disproves this.

It shows that private tenants pay 25% to 30% of the relevant benefit towards rent and the AS only covers 70% of any additional cost above this, up to a maximum ceiling.

This design prevents landlords from simply being able to raise rents as the CPAG claims, because the tenant still has to find 30% of the increase and 100% of any rent above the maximum.

Maximum rates were increased in April 2018, which caused an increase in the AS from $1.2b to $1.5b.

While many people believe that the AS is paid directly to landlords, this is not the case.

While the AS increased 25% in the year to April 2019, rental prices only increased by 4.6%. This was also at a time of large cost increases and new regulations.

If, as the CPAG claims, the AS drives up rental prices, why did rental prices not increase more when the AS limits were raised?

The report also states that “in a period of cynical neglect of the AS between 2005 and 2018, there was no change to the maximum rates”.

However, rental prices increased during this time – which suggests that the AS doesn’t have any impact on rental prices.

In the report, the CPAG says it wants to see a significant increase in state house building so that people can move from private rentals into publicly funded houses.

This would mean an increase in the Income Related Rent payments, which is the equivalent of the AS for state house tenants.

The report also says that by the year 2021, the AS will increase to $1.5 billion while the Income Related Rent subsidy will increase to $1.3 billion.

The AS provides assistance for around 290,000 households (an average $5,170 per household), while the Income Related Rent subsidy assists around 70,000 state tenants (an average of $18,570 per household).

Do we really want to move people out of private rentals?

While the CPAG claims that rental property providers are getting wealthy from the AS, their proposal to wipe it will cost an extra $3.5 billion of taxpayer funds per year in increased benefits.

If it is such a poor use of Government funds, why are state house subsidies rising at a faster rate than the AS and why will it cost an extra $3.5 billion in Government funds to remove it?

The CPAG’s proposal is a poorly thought out proposal that is not in the best interests of tenants or taxpayers.

*The CPAG’s report, “The Accommodation Supplement: The Wrong Tool to Fix the House”, can be read here.

Read more:

Rents will raise – Greens 

Tags: housing shortage landlords NZPIF property investment property management rental market rents tenants

« COMMENT: Tenant selection turned into a lotto drawCOMMENT: The compliance struggle »

Special Offers

Comments from our readers

On 13 June 2019 at 3:10 am Peter L said:
The short answer - yes they do want more people to shift out of private rentals.
There us the view that all rentals should be HNZ or social housing and that there should be no private landlords.
Looks like CPAG supports this view no matter what it costs taxpayers.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Details confirmed for transitional licensing
    “And the other requirement is to have an internal complaint process as set out in the licence conditions. It’s good to see...”
    17 hours ago by Mr Slater
  • When is a client really a client?
    “And this subtle upgrade to the understanding of a complaint. Which changes the ISO definition from an expression of dissatisfaction...”
    3 days ago by JPHale
  • When is a client really a client?
    “Just released additional standards from the FMA. Record keeping potentially until 7 years after the death of the life...”
    3 days ago by JPHale
  • When is a client really a client?
    “@ReganT interesting that the two life advisers involved with the code working group discussion are the ones being argued...”
    4 days ago by JPHale
  • When is a client really a client?
    “In a previous reply I responded to the concept of payment as a trigger. I actually agree it’s not. While we don’t often...”
    4 days ago by regant
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.02 4.09 4.39

Last updated: 21 November 2019 9:39am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com