Affordable rentals

About affordable rentals

Affordable rentals provide homes at lower-than-market rents for households unable to access private rentals due to barriers or household circumstances beyond affordability, and unlikely to be able to access social housing.  These homes will bridge the gap between the lower level of rent in social housing and the private rentals, helping households move toward housing independence.

Through Budget 2025, we’ve made changes to affordable rentals to align with our investment objective, to enable people in high housing need to have access to stable and secure housing. We have also changed how these homes are funded and delivered.

What is new in the Budget 2025 Flexible Fund? 

• Updated eligibility: the eligibility criteria have changed to support people in high housing need and towards housing independence.
• Targeted investment: we’re focusing on specific investment locations to help the people most in need
• Expansion of providers and delivery modes: more housing providers can now apply to deliver affordable rentals. They can build new properties and in some locations lease and purchase existing properties from the market.
• Updated funding model: we’ve established an on-going subsidy-based funding model to maximise the number of houses we can fund. This means that providers will no longer receive upfront grant funding to deliver affordable rentals.

Accessing affordable rentals

These homes are intended for households who face barriers to private rentals due to barriers or household circumstances beyond affordability, and meet the following criteria:

• have a housing need that’s unlikely to be prioritised for social housing
• have previously accessed housing support (such as social housing, transitional housing or emergency housing) or are currently transitioning from that support.

Providing affordable rentals

Affordable rentals are provided by registered community housing providers (CHPs), Māori housing providers and other organisations that deliver housing.

Providers will have extensive community connections and have experience working with one or more of our populations of interests (detailed in the housing investment plan 2025). Based on a provider’s specialisation, they may work with specific groups of people or families.

Housing investment plan

How affordable rentals are funded

Tenant rent contribution for affordable rentals is set below market rates at 50–70 per cent of median market rent for the same sized home (based on number of bedrooms), for the area. Providers will assess the households eligibility and determine the rent.

We will fund the housing provider to cover the balance between the tenant’s rent contribution and the rent for the property that is agreed between HUD and the provider.

In some cases, an operating supplement is also paid to enable housing supply.

Further information on the funding model will be provided when applications open 27 February 2026.

Provider responsibilities  

Affordable rental providers are responsible for:

• developing or purchasing houses or leasing them from the market;
• placing eligible households into the homes;
• assessing on-going eligibility; and
• providing on-going tenancy management, and asset and property management (where relevant) – for example, tenancy management plan.