Budget 2026 – for the housing and urban system

The Budget does this by combining three things: Enabling the market, better targeting social housing, and providing a pipeline of future investment in social housing. This means: 

Enabling the market: Going for Housing Growth 

Incentives for Growth Fund

Budget 2026 supports the Government’s Going for Housing Growth programme by improving council and community incentives to support housing growth.

The Budget introduces the Incentives for Growth Fund, with $400 million over four years held in tagged contingency. Payments will be linked to housing growth and help councils manage the impacts of new development. Funding is expected to commence from 1 April 2027.

Delivering a fairer and more targeted social housing system

Flexible Fund

Budget 2026 is investing a further $69.2 million over the forecast period into the Flexible Fund to deliver between 1800 and 2250 additional social and other homes over three years starting from 2028/29.

The Government’s investment in housing focuses on highest need. Using reliable data and local insights, funding will go to places with the highest housing need and where it makes the biggest difference.

In some places the greatest need is for one-bedroom homes. In others it may be larger homes for big families, Māori housing, or other tailored solutions. The fund also supports a wider range of providers, including community housing providers, Māori providers, and others, to bring forward proposals that meet local need.

The latest funding builds on the Government’s previous investments through Budgets 2024 and 2025 which funded more than 2700 social homes. This includes between 675 and 770 social homes and affordable rentals through the first investment into the Flexible Fund announced at Budget 2025.

Review of Social Housing 

Budget 2026 progresses the first changes made as part of the Review of Social Housing.

The Review aims to deliver a fairer, more effective and more efficient system. Its scope includes social housing and affordable rentals and assistance with housing costs - Income-Related Rent (IRR), Accommodation Supplement (AS) and Temporary Additional Support (TAS).

Ministers have agreed to three key shifts to be progressed over a number of years:

1. Refocusing social housing for those who have the greatest difficulties accessing private housing.
2. Support people to move out of social housing and into homes of their own.
3. Make the system fairer by helping people to move to independence by reducing the cost difference between social housing and private housing.

Budget 2026 makes a meaningful start on rebalancing housing subsidies so after-subsidy costs in social housing are closer to, but still less than, the private market. 

The changes are intended to lower the disincentives to improve personal circumstances and improve equity. From 1 April 2027, the changes to Income Related Rent (IRR), the Accommodation Supplement (AS), and Temporary Additional Support (TAS), include: 

• increasing IRR and emergency and transitional housing contributions from 25 percent to 30 percent of income
• increasing AS maximum rates across all areas
• updating TAS settings, including lowering the maximum rate and simplifying how costs are assessed.

Together, these measures support a housing system that is more effective, more sustainable, and better aligned to the needs of people and places across New Zealand.