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Income-Related Rents

This year the Government instructed Housing New Zealand to move from charging market rents to income-related rents.

Why?

 The 'market rents' policy saw state house rents rise significantly.

 State house rents rose 106% from 1992-1999. Meanwhile private rents rose 23% and inflation 12% over the same period.

 Housing New Zealand figures show that turnover during this period rose from 12% to 34% as tenants moved more often because of rising rents.

 Market rents and escalating housing costs have been identified by housing and welfare experts as the single, largest cause of poverty over the past decade.

 Income-related rents will ease the financial burden faced by thousands of low-income state house tenants


What does this mean?

 From now on all state house rents will depend on a tenant's income.

 Low-income tenants will pay no more than 25% of their income on rent.

 All other rents will depend on a tenant's income – but no one's rent will go up as a result of the changeover.

What doesn't this mean?

No one's rent will rise as a result of the changeover.

No one will be required to vacate a state house because of their income.


What is a low-income?

For single tenants without children: the equivalent to the after tax single-living alone rate of NZ superannuation ($225 a week)

For couples and sold-parents: equivalent to the after tax couple rate of NZ superannuation ($347 a week)


Who is going to benefit?

 More than 130,000 people living in state houses nationwide will be better off

 80% of all 59,000 households renting state houses will be better off.

 58% of all state tenants will be between $20 and $80 better off each week.

 About 30% of state tenants will receive a partial refund of the bond they paid when they were paying a market rent – on average this will mean a one-off refund of $105 per household

 More than 4800 state house tenants who did not know that they were entitled to an Accommodation Supplement will now beneft as they all qualify for an income-related rent

 No state tenant's rent will rise as a result of this changeover

How much will tenant's benefit by? (As at 27 November 2000)


Area No. households renting state houses to benefit/total No. households Average $ tenants will be better off each week/year Annual regional benefit for the region
Auckland Central 592/745 $60 - $3120 $1.8 million
Manurewa-Crockers 510/962 $41 - $2132 $1.1 million
Glen Innes 1794/2095 $49 - $2548 $4.4 million
Henderson 1288/1604 $52 - $2704 $3.3 million
Mangere 2124/2579 $46 - $2392 $4.78 million
Manurewa 1683/2041 $45 - $2340 $3.77 million
Mt Albert 871/1047 $58 - $3016 $2.1 million
Mt Roskill 1730/2033 $52 - $2704 $4.59 million
New Lynn 1674/1961 $48 - $2496 $4 million
Otahuhu 1076/1303 $45 - $2340 $2.36 million
Otara 1872/2350 $42 - $2184 $3.95 million
Panmure 1336/1616 $55 - $2860 $3.7 million
Papakura 934/1101 $40 - $2080 $1.9 million
Royal Oak 10341252 $44 - $2288 $2.29 million
Takapuna 1073/1285 $50 - $2600 $2.72 million
Total for Auckland Region $47.07 million

Gisborne 1038/1242 $25 - $1300 $1.3 million
Hamilton 1979/2421 $32 - $1664 $3.2 million
Hastings 1175/1471 $21 - $1092 $1.27 million
Huntly 354/426 $20 - $1040 $3.58 million
Area No. households renting state houses to benefit/total No. households Average $ tenants will be better off each week/year Annual regional benefit for the region
Manawatu 1395/1824 $24 - $1248 $1.7 million
Napier 1182/1493 $23 - $1196 $1.3 million
New Plymouth 1250/994 $23 - $1196 $1.1 million
Rotorua 672/843 $30 - $1560 $1.02 million
Tauranga 808/925 $42 - $2184 $1.67 million
Te Kuiti 377/476 $22 - $1144 $425,603
Thames 384/473 $27 - $1404 $517,571
Wanganui 621/813 $19 - $ 988 $621,621
Whakatane 427/524 $27 - $1404 $584,409
Whangarei 1526/1782 $28 - $1456 $2.12 million
Total Northern Region $17.76 million

Porirua – fanau housing 342/528 $22 - $1144 $3.8 million
Mana (includes Porirua) 1808/2606 $30 - $1560 $2.75 million
Lower Hutt 949/1283 $35 - $1820 $1.67 million
Naenae 998/1215 $35 - $1820 $1.78 million
Wellington 943/1383 $44 - $2288 $2.07 million
Total for Wgtn region $12.07 million

Nelson 570/684 $31 - $1612 $856,300
Upper Valley 1092/1496 $30 - $1560 $1.6 million
Blenheim 334/421 $30 - $1560 $505,235
Linwood 1438/1820 $27 - $1404 $1.91 million
Papanui 1325/1677 $30 - $1560 $2 million
Riccarton 1359/1686 $30 - $1560 $2 million
Timaru 584/768 $14 - $ 728 $408,146
Dunedin 1139/1612 $21 - $1092 $1.18 million
West Coast 224/304 $17 - $ 884 $188,465
Invercargill 390/522 $13 - $ 676 $267,290
Total Southern Region 8455/0 $10.9 million


Has everyone applied?

Out of 59,000 households living in state houses nationwide:

 So far, 51,643 have applied

 Those who haven't applied have been contacted by Housing New Zealand tenancy managers several times to encourage them to apply.

 3698 tenants have advised they won't be applying as there will be no rent change for them

 It is not too late to apply for an income-related rent – all changes will be backdated to 1 December, 2000.

 Tenants were asked to apply because this was the only fair way to ascertain individual household incomes.

Will state house tenant's continue to receive the Accommodation Supplement from the Department of Work and Income New Zealand.

No. All Department of Work and Income accommodation assistance for state house tenants will be replaced by income-related rents – that's why state tenants receiving accommodation assistance must apply.


Is there an asset test?
There is no cash assets test. Interest from investments or savings above $2,700 per annum for a single person or $5400 for others will be counted.


What counts as income?
Broadly, any person's income will include: wages and earnings; income-tested benefits; NZ superannuaion; Veterans pension; student allowances; ACC payments; family support (only counting from second child onwards); interest from savings, rent from property etc.


What about people who do not live in a state house?
Government spends around $860 million a year assisting low-income people to pay their rents to private landlords or to pay their mortgage.

Low-income people are also going to benefit from a wide range of new Government initiatives including: reversal of national cuts to superannuation; full entitlement access to benefits; an increase in the special benefit; and the introduction of the Employment Relations Act.


What about building new state houses?
So far this year more than 415 new properties have been acquired nationwide – most in the Auckland region.

However by ending state house sales more than 10,000 properties – previously on the 'For Sale' list were secured.


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