A Newsroom investigation reveals a Ministry of Social Development initiative to provide emergency housing made the housing crisis worse and enriched a small set of landlords and real estate agents.
A former Harcourts property manager in South Auckland has blown the whistle on an emergency housing scheme where a group of landlords were paid up to $3000 a week by the taxpayer for “marginal to uninhabitable” private rentals.
When the landlords ran out of houses they turned to real estate agents who procured vacant properties – allegedly without the consent of the people who actually owned them.
The Ministry of Social Development has admitted the scheme made the rental crisis worse – as people took rental properties off the market and used them instead to rent out to MSD to earn thousands more.
This is a real scandal. Taxpayer money was spent on this scheme which resulted in increasinging homelessness (as fewer properties available) and enriching a group of landlords.
Most people know the Emergency Accommodation scheme put people in motels and hotels at market rates of over $120 per night for every room rented.
What they don’t know is from 2018 – within this current term of government – the Ministry of Social Development extended this scheme to include private homes.
The catch is that MSD continued to pay the same motel room rates to landlords for every room in the house they would rent.
A three-bedroom house rented out at a “hotel” rate of up to $150 per room per night could bring in $3000 per week in areas of the country where median rent for those was $550. The rent was capped at the $3000 mark.
MSD did not visit the properties to check if they met basic living standards.
Minister of Social Development Carmel Sepuloni declined an interview request on the grounds she was still waiting for a briefing on it.
When Newsroom asked Sepuloni about the scheme on August 10 she also appeared to have no knowledge of it. Newsroom received a similar response when an earlier query was made to her office, in June.
She seems really on top of her portfolio!