Department of Social Development largesse pushes landlords to ‘print money’ – social worker

A social worker is calling for an investigation into the ‘blatant criminality’ and ‘profiteering’ that has seen private landlords paid well above market rates for emergency accommodation.

The Department of Social Development paid more than $37 million in emergency accommodation between 2017 and 2020 to landlords and property management companies in Auckland, according to a new Auditor General’s report – a change from previous policy of using only motels and other providers.

The ministry often paid well above market price as landlords took advantage of the desperate situation, taking affordable housing away from potential tenants and distort the local rental market. A unit rented for $1,400 a week as public housing two weeks later cost the taxpayer $3,900 as emergency housing.

Social Development Minister Carmel Sepuloni says she knew nothing of the practice until it had already stopped. But Alastair Russell of Māngere East Family Services says not only was the expense ‘well known’ to staff, it was also widely known that the accommodation offered was not worth the exorbitant rates charged.

“We were raising these issues with Work and Income staff,” Russell told RNZ on Wednesday.

“There is at least an assumption that these landlords, these property managers were providing labor and income that these properties were of an appropriate standard – and many of them clearly were not. The degree of profit that was happening is just abhorrent…

“The ministry is putting vulnerable and desperate families in housing… The landlord sees the possibility of printing money and thinks of nothing else.”

Joel C. Hicks