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The government’s announced a major shake-up of social housing beginning in this year’s Budget - which will boost weekly support for 110,000 families by almost $15 but leave another 80,000 families worse off by $30 a week.
The change will be paired with more stringent criteria for getting a social house - and possibly new tenancy duration limits and regular check-ins.
Housing Minister Chris Bishop made the pre-Budget announcement at Parliament on Thursday, launching the planned multi-year reform programme he said it would make the social housing system fairer, better targeted and more focused on encouraging independence.
He acknowledged the changes could be done in a way that didn’t leave as many households worse off if “money was limitless”, but he said it wasn’t so the government had to make “tough choices”.
He said the social housing situation currently was “incredibly backwards” and “inequitable”, calling the system “unfair”, because similar households can get 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.”
He also pointed to the stock itself not being used “efficiently”.
“Social housing is a high-cost intervention and should be targeted to those who need it most.
“Modelling shows that if 10 percent more tenants exit after five years, around 6000 more vacancies could open up over a decade.”
The government is focusing its reform on three key areas:
Refocusing social housing more tightly on those who need it most
Bishop said social housing would be more tightly prioritised for people who needed it most, by redesigning the needs assessment to focus on severe and persistent barriers people face.
This would include supply issues, selection bias and challenges such as mental health or addiction issues. Affordability would remain relevant for social housing assessment, but if its someone’s main challenge, they would be best supported through a subsidy.
Improving flows out of social housing to housing independence
The government will also explore changes to help people through and out of social housing, such as defined tenancy durations, a responsibilities framework, better support to help households overcome barriers to private housing and more regular engagement to assess changing needs and eligibility - this would include tenancy reviews.
Bishop said there would be a range of people for whom a social house for the rest of their life was appropriate.
“The role of the government should always be there to provide warm and dry housing for people in those situations, but there are also people who don’t actually need it for a long length of time.”
Improving fairness and financial incentives toward independence
In Budget 2026, the government has agreed to increase the minimum Income Related Rent contribution for social housing tenants and those in emergency and transitional housing, from 25 percent to 30 percent of income from 1 April 2027.
It would be phased in over 12 months at each tenant’s annual review or change of circumstances. It was expected to deliver $387.5 million in operating savings, which would be reinvested in higher maximum weekly Accomodation Supplement rates. Support would increase by between $10 and $30 a week.
The government would also reduce the maximum rate of Temporary Additional Support, which would generate $195.6m in savings.
The change would see 111,000 families not in social housing get an extra $14.91 on average per week, while 45,000 families would lose $10.82 on average a week.
For those in social housing, 84,000 families would be $31.02 worse off on average a week.
Bishop said this change was about “narrowing the gap between social housing and private renting, so the system is fairer and better supports work, more hours of work and movement into private rentals, where that is appropriate”.
In looking to make the system fairer, Bishop said “by definition, the way to do it is to close the gap between income-related rent”.
Asked whether the government could do this in a way that doesn’t leave as many households worse off, Bishop acknowledged in theory that could be done.
“If money was limitless, you could do lots of different things, but it isn’t, so we have to make tough choices.”
He called it a “balanced approach”, bumping up the income related contribution cost, while increasing the accommodation supplement, and refocusing the needs assessment at the same time.
He said around 30 percent of people in social housing earned enough to pay for a market rental, “not everyone will be able to do that, but many can”.
There were also around 1100 people in social housing who pay market rents already.
“It’s a small number, for sure, but it illustrates the pickle we’ve got ourselves into as a country when it comes to the system we’ve got.”
Bishop said all the changes combined, such as a duration limits and moving those who can survive in the rental market out of social housing, would free up space in social housing for those with “addiction problems, or mental health, or disabilities, or family violence survivors - some of those people who are on the register right now, who miss out”.
“We’ve got this incredibly backwards, inequitable situation,” he said, adding that most New Zealanders would say social housing should be for people with those needs.
“That’s who social housing should be for, and that’s what we’re creating a system for.”
Bishop said those who would move into the private market would be able to get ahead, and pointed to the increased Accomodation Supplement in terms of support they would receive.
There was also support through MSD, and the wider reform in this area was a “bit of a carrot and stick” approach.
He wouldn’t guarantee they would be better off as “individual circumstances will differ”.
He indicated the policy work was still to be done around specific duration limits saying “I wouldn’t get fixated on the number”.
The duration limit “as a concept” was what the government was signalling, in order to illustrate it could free up space in the social housing supply.
He also wanted to get the overall cost of housing supports down over time. In the 2025 calendar year, the government spent $5.5 billion on housing supports including IRRS, AS, TAS, Emergency Housing, Transitional housing and other programmes responding to homelessness.
Bishop said $5.5b was “unsustainable” in a financial sense, but the government was also not getting “back for buck” out of the spend right now.
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