It launched its promised overhaul on Wednesday but says more radical action will be required.
Ministers want to move people out of motels and into stable housing, including private rentals.
To encourage that outcome, they plan to bring back 90-day no-cause evictions and are considering social bonding - a scheme which would see landlords paid if they keep families out of emergency housing.
Property Investors Federation president Sue Harrison said landlords would be open to renting to families living in emergency accommodation under those conditions.
Landlords were currently reluctant to take on emergency housing tenants because they could damage property, miss rent payments or disturb neighbours, she said.
"It is extremely difficult and stressful... for property investors to take on tenants with risk.
"If someone has come from an emergency housing situation, you tend to see them as a social housing prospect.
"We often do want to give those people a go... taking some of the risk away will definitely incentivise them into properties."
A 'bizarre' idea
Manawatū Tenants Union co-ordinator Cam Jenkins said many of the people in emergency housing were there because they were evicted by landlords.
"A lot of people I see through my office who are in that space have been given a 90-day notice for repairs and maintenance and haven't been able to find somewhere else to ask to live. So they're naturally having to go down emergency accommodation.
"So I think to go back and say 'we're going to use private landlords to bridge the gap' is really bizarre, because they were already in private rentals."
Jenkins did not think the focus on shifting people from emergency motels to private rentals would work.
"I don't see it solving anything to do with our housing problems.
"Unless we're adding to the supply, all we're doing is just moving the chairs around. If you think of it like a classroom where you've got houses or chairs, we're just moving the chairs around, we're not actually bringing more chairs on board, or into the room."
Youth worker Aaron Hendry agreed the emergency housing system must change but was not convinced the coalition government's approach will work.
"The reality is that those environments are unsafe and often people in those environments are being harmed...so it's really important that we do everything we can to move them through that system and get them into a much safer and more supportive housing as quickly as we can.
"We already know that there are a lot of barriers to accessing emergency accommodation for people and the experience from people who really do need it is that when they reach out for support, often they can't get it. It's hugely demoralising and can be really dehumanising, the process.
"In some cases, people are walking in for support and are being turned away and staying on the streets or staying in really unsafe environments."
RNZ
