12 February 2025
David Dahya
[FYI request #29702 email]
Tēnā koe David Dahya
Official Information Act request
Thank you for your email of 8 January 2025, requesting information about how the
Ministry of Social Development (the Ministry) calculates equity for benefit
entitlement purposes.
I have considered your request under the Official Information Act 1982 (the Act).
Please find my decision on each part of your request set out separately below.
1. Can MSD confirm which formula they would use to calculate equity?
The Ministry uses the ratable valuation or the amount insured, whichever is greater
in value:
https://workandincome.govt.nz/map/definitions/rateable-valuation.html
or the amount insured, whichever is greater in value. That value is then reduced
by the amount of their outstanding mortgage principal to find the net equity.
Please note that the rateable valuation is the house and land value that is used to
set rates. This is dependent on the local city or district council and can be assessed
using capital value, land value, mixed value (house and land) or annual value
(Auckland City Council only).
The net equity formula is house and/or land value minus the outstanding mortgage
only (no interest). The following link to the Ministry’s website outlines the formula
and provides an example:
https://workandincome.govt.nz/map/income-
support/extra-help/accommodation-supplement/net-equity-01.html.
2. In this situation, how many of the properties would MSD consider equity in
(in terms of asset value) to determine benefit entitlements for the mother?
Based on the information provided, the net equity in both properties not
occupied by the mother would be assessed as a cash asset.
When assessing a person’s cash assets for Ministry assistance, some assets are
excluded. The home property of the client and the land on which it is situated
would not be considered as a realisable asset and would be excluded from any
cash asset assessments (selling the home would negatively affect the wellbeing
of the client).
The Aurora Centre, 56 The Terrace, PO Box 1556, Wellington
– Telephone 04-916 3300 – Facsimile 04-918 0099
A property that is not
used as a home for the client or their family may be
considered as a realisable asset. If it is determined that the property is
realisable, equity the person holds in the property will be calculated and will be
considered as a cash asset.
https://workandincome.govt.nz/map/income-
support/extra-help/accommodation-supplement/property-not-used-as-home-
01.html. The Ministry considers how much net equity a person has in their former family
home following separation. Note, this is not assessed until:
• a decision on the sale of the home is made or
• there is a Relationship Property Settlement (previously matrimonial
property settlement) - under a Property Agreement or Property Order
This is standard procedure as outlined at this link:
https://workandincome.govt.nz/map/income-support/extra-
help/accommodation-supplement/net-equity-in-former-family-home-
beneficiaries-01.html. Furthermore, any income gained from the property can be included when
assessing income-tested Ministry assistance. The assessable income is generally
considered the difference between the actual rent the client receives and the
allowable expenses associated with the property. For more information see:
https://workandincome.govt.nz/map/income-support/core-policy/income/types-
of-income/rental-property-income.html. Each of these factors may affect eligibility for, and the rate of, Ministry financial
assistance.
3. They may not be legally required to but would it be reasonable to expect
MSD to contact the industry experts above before making their decision?
Generally, the Ministry will not consult industry experts for each individual case.
Ministry staff follow set policies and procedures to support consistent decision
making that aligns with Ministry policy and legislation.
However, if a client does not agree with a Ministry decision, the client can apply
for a Review of Decision. To find out more about the reviews and appeals process
and what decisions can be reviewed, please see:
https://workandincome.govt.nz/map/income-support/core-policy/reviews-and-
appeals/reviews-and-appeals.html. Please note that the Ministry recommends that the specific client in the situation
mentioned should contact us, or their case manager if they have one, to discuss
their situation. This will enable the Ministry to provide more detailed advice and
guidance.
If you wish to discuss this response with us, please feel free to contact
[MSD request email].
If you are not satisfied with my decision on your request, you have the right to
seek an investigation and review by the Ombudsman. Information about how to
make a complaint is available
at www.ombudsman.parliament.nz or 0800 802 602.
Ngā mihi nui
pp.
Anna Graham
General Manager
Ministerial and Executive Services
