National plans to bring back market rents

The National Party has confirmed one of the worst-kept secrets of the election campaign - that it will bring back market rents for state houses.

Oddly, the news was announced yesterday by Labour's Housing Minister, Steve Maharey, after his staff noticed that National posted its housing policy on its website without any public statement.

National housing spokesman David Carter said it was posted early yesterday morning, but no announcement was made because party leader Don Brash was busy unveiling his policy on Auckland transport.

The policy still does not say plainly that National will restore market rents for state tenants, but says: "We will ensure there is equity between private rentals and state home rentals."

Mr Carter confirmed that this meant new state tenants would pay market rents, but would also be able to claim the accommodation supplement. At present, the supplement is available only for private sector housing costs.

He said existing state house tenants who were paying only 25 per cent of their incomes in rent would be able to stay on the same basis and would not transfer to market rents.

On July 31, 90.4 per cent of Housing New Zealand's 66,283 tenants were paying income-related rents, normally 25 per cent of their incomes. The other 9.4 per cent were already paying market rents.

Apart from the existing tenants who would be "grandparented" into their current rentals, the new policy would effectively return to the market rental policy of the previous National Government of the 1990s.

"We are restoring the accommodation supplement as the primary way of delivering housing assistance to low-income families," Mr Carter said.

He said Labour's policy of cheap income-related rents had created a waiting list of 12,000 people, many of whom would never get into a state house. Labour's housing policy, released yesterday by Prime Minister Helen Clark in Otahuhu, proposes adding only 3288 new state houses in the next four years.

National would also resurrect a 1990s scheme which allowed Housing NZ tenants to buy their state houses with a loan of up to $15,000 which was written off if the buyer stayed in the house for seven years.

Mr Carter said the revenue from house sales would be ploughed back into buying more state rental units, in effect recycling houses faster to reduce the waiting list.

Although National reduced the number of state houses in the 1990s, Mr Carter said it would aim to keep the present number in the future.

The accommodation supplement pays 70 per cent of housing costs above 25 per cent of the family's net income. For a beneficiary family, net income is counted as the main benefit plus family support for the first child.

On a national basis, Housing NZ tenants now pay an average of $100.95 a week for a three-bedroom house compared with an average market rent for the same houses of $220.90.

An unemployed couple with two children paying that rent would get an accommodation supplement of $93.03 a week, reducing their net rent to $127.87 - about $27 a week more than they pay now.