Housing security slipping for older Kiwis

By Dr M Claire Dale, honorary research fellow at the University of Auckland Pensions and Intergenerational Equity research hub.

Opinion: Between 2000 and 2020, New Zealand experienced the steepest rise in income poverty among older people in the OECD.

In 2021, 18 percent of over-65s were living in poor-quality or overcrowded housing. Meanwhile, a 2022 Retirement Commission report suggests that in 25 years, 40 percent of older New Zealanders will be renting - up from 19 percent today.

Housing is central to financial, mental and physical wellbeing. Secure, suitable housing improves lives, while unaffordable or inadequate housing has negative consequences. Yet for many, the numbers don’t add up. Superannuation, at $522 per week (after tax) for a single person living alone in 2024, doesn’t even cover the $550 median weekly rent for a small house or apartment.

With the Government reviewing its retirement income policies this year (submissions close 30 June), now is the time to push for change. Improving rental affordability for seniors must be a priority.

First, the Ministry of Social Development's policy on access to the accommodation supplement needs to change.

The accommodation supplement is an income and asset-tested weekly payment to assist people who are not in public housing, with their rent, mortgage or board.

At the end of 2024, of the 928,029 people receiving NZ Super, 48,789 (5.26 percent) were also receiving the accommodation supplement. However, a major flaw in the supplement’s design - one that creates financial hardship - is its strict asset cap, which limits both access and ongoing eligibility.

The cap hasn’t been increased or inflation-adjusted for 30 years. The asset cap to qualify for the supplement for people receiving superannuation and renting is $8100 for a single person and $16,200 for a sole parent or couple. The cap is bluntly applied: $1 over the limit means zero entitlement.

This sees many recipients stuck in precarious financial situations. Older people are particularly vulnerable to high health costs, including dental costs. The $8100 limit would not cover many extra expenses, and once depleted, it would be difficult, if not impossible, to accumulate a new emergency buffer.

The asset limit needs to be adjusted to reflect the reality of living costs. Without adjusting for inflation, the limit for assets for a single person renting, receiving NZ Super and the accommodation supplement needs to be increased from $8100 to at least $16,000. In addition, the asset limit needs to be less bluntly applied, allowing at least 5% excess before entitlement is withdrawn.

The second policy change I suggest is for central government to reinstate local government’s access to the income related rent subsidy (IRRS), which helps pay the difference between market rent and what a public housing tenant pays. This would enable local councils to continue to build, own, maintain and provide affordable, appropriate housing for seniors.

New Zealand has the lowest level of public housing in the OECD, with a public housing stock of just 3.4% of all housing, less than half the OECD average of 7%. Yet public housing provides stable, secure, affordable homes so low-income people can remain in a community and participate more fully.

The Ministry of Social Development determines the amount of income-related rent paid by the majority of public housing tenants. The rent amount is usually 25% of the tenant's net income.

Te Tūāpapa Kura Kāinga, the Ministry of Housing and Urban Development, pays the income-related rent subsidy to Kāinga Ora Homes and Communities and registered community housing providers (CHPs) to cover the balance between tenants’ rental payments and the market rent for the property.

In 2022, Kāinga Ora, New Zealand's primary public housing provider, owned and managed 64,870 homes, accommodating more than 180,000 people. There were an additional 11,401 community housing provider (CHP) properties.

Because local councils can no longer get CHP status, they can’t get government assistance in the form of the IRRS, so generally, they cannot afford to continue providing senior housing. Yet for almost a century, local councils were New Zealand's second biggest provider of social housing, and from the 1940s to 1991, they were involved in a highly successful housing partnership with central government.

Given the urgency of New Zealand's social housing crisis, it's difficult to understand why local government is excluded from playing a bigger role.

These policy changes are urgent, affordable and involve little or no extra cost to central government. They would enable older people to better prepare and protect themselves financially, and local government would be able to provide housing support to their older citizens, as they did so well in the past.