- Hon Chris Bishop
- Hon Louise Upston
The Government is launching a multi-year reform of New Zealand's social housing system to make support fairer, better targeted, and more focused on encouraging independence, Housing Minister Chris Bishop and Social Development Minister Louise Upston say.
"Some people will always require housing support. Social housing should be there for those who genuinely need it, for as long as they need it. But it should also be a pathway to independence where that's possible, not a place where people get stuck," Mr Bishop says.
"We have made good progress to fix the social housing system by turning around Kāinga Ora, funding Community Housing Providers to deliver over 2000 additional social houses, supporting lower-cost borrowing, and creating a Flexible Fund to get the right homes in the right places for the people most in need.
"But there is more to do to ensure that the system is fair, delivers value for taxpayer money, supports upward mobility, and gets help to those who need it.
"The current system is unfair. Similar households can get very different support depending on whether they are in social housing or a private rental. On average, social housing tenants on a main benefit have $105 more a week left after housing costs than comparable private renters receiving the Accommodation Supplement.
"The system is also expensive and our stock is not being used efficiently. Over the past decade, total housing support spending has more than doubled to $5.5 billion, while the social housing waitlist has grown approximately six-fold.
"Social housing is a high-cost intervention and should be targeted to those who need it most. Modelling shows that if 10 per cent more tenants exit after five years, around 6000 more vacancies could open up over a decade."
Louise Upston says another problem with the system is that it can trap people into long-term dependence.
"We know that 30 per cent of tenants have been in social housing for over 10 years. Households are now forecast to remain there for an average of 16.7 more years. Too often, support is not regularly reassessed, and tenants are not incentivised to gain more independence."
The Government is making three key shifts to address these issues.
- Refocusing social housing more tightly on those who need it most
Social housing will be more tightly prioritised for people who need it most. The social housing needs assessment will be redesigned to be more focused on severe and persistent barriers that people face when trying to access private housing, including supply issues, selection bias, and challenges such as mental health or addiction issues.
Affordability will remain relevant for social housing assessment. But if it's the main challenge for people, then they are best supported through a subsidy (like the Accommodation Supplement) rather than a social house.
2. Improving flows out of social housing to housing independence
The Government is also exploring changes to support more movement through and out of social housing, including:
- defined tenancy durations, with exemptions where need is ongoing,
- a responsibilities framework to support progress toward independence,
- better support to help households overcome barriers to private housing,
- more regular engagement to assess changing needs and eligibility, including tenancy reviews.
3. Improving fairness and financial incentives toward independence
The Government will narrow the gap between the cost of private and social housing, so that support settings are fairer and better encourage work, increased hours of work, and movement into private rentals where appropriate.
Budget 2026 will increase the minimum Income Related Rent contribution for social housing tenants and those in emergency and transitional housing, from 25 per cent to 30 per cent of income from 1 April 2027. The Income Related Rent change for social housing tenants will be phased in over 12 months at each tenant's annual review or their next notification of change of circumstances.
"It will increase rents for around 84,000 households by an average of about $31 a week from next year, but even then, most social housing tenants will still generally pay less than comparable households in the private market," Ms Upston says.
"This change is expected to deliver $387.5 million in operating savings over the forecast period and most of those savings will be reinvested in higher maximum weekly Accommodation Supplement rates, with support increasing by between $10 and $30 a week at a cost of $374.3 million over the forecast period.
"At the same time, the Government will reduce the maximum rate of Temporary Additional Support to better reflect its original purpose as temporary hardship support, generating $195.6 million in operating savings over the forecast period," Louise Upston says.
Officials will hold targeted discussions in the second half of this year with iwi, community housing providers, Kāinga Ora, and social service providers as the next stage of reform is developed.
"Reforming social housing will involve hard choices, but change is needed. The current system is unfair, costly, and not targeted enough to those with the greatest need," Mr Bishop says.
"We want a system that supports people who need help, while also backing people to move forward where they can and making sure support is available for others who need it."
Notes to editors:
Budget 2026 rebalances housing support to improve fairness and incentives.
- Minimum Income-Related Rent contribution will rise from 25 per cent to 30 per cent of income, so social housing tenants pay rents closer to, but still below, what low-income private renters pay. Thirty per cent is a figure widely used internationally as a benchmark for housing affordability.
- This change will be phased in over 12 months from April 2027, at the time of each tenant's annual review or their next notification of change of circumstances (whichever comes first).
- Rents for around 84,000 households will increase by an average of about $31 per week however after the change, social housing tenants will still be better off on average than comparable households in the private market.
- The change is expected to generate $387.5 million in operating savings over the forecast period, which will be reinvested in higher maximum weekly Accommodation Supplement rates.
- Maximum rates of the Accommodation Supplement will increase by between $10 and $30 per week.
The maximum rate of Temporary Additional Support will be adjusted to better reflect its original purpose as temporary hardship support, rather than a long-term income top-up.
