A community support group says rules need to be relaxed to make way for permanent housing solutions.
Families in emergency accommodation have been cast out to make way for people paying for motels. In Whangarei, motels were cleared out to make way for fans of Kiwi band Six60, in town for a concert.
"About six months ago we received a huge booking, and we are completely and utterly booked out," said Casablanca Motel manager Tel Hudson. "Every room has gone and the booking pre-dated our emergency housing contract.
"We've got no problem with the people staying here, there's just no room for them."
Ricky Houghton from the He korowai Trust says the situation is unfair for everyone involved, and motels are unsuitable living environments for big families.
"You have these big families going into motel rooms, and it compromises the other residents living in there - kids running down hallways or cramped up into rooms. It's just unworkable."
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He says there needs to be a step in the emergency accommodation system before hotels.
"This emergency accommodation, there needs to be a step before that… more priority on keeping people in their houses."
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Mr Houghton says many people in houses are also in dire situations, paying 85 percent of their income on rent.
One homeless family in Whangarei turfed out of their motel room faced sleeping in a car before temporary lodgings were arranged.
The Ministry of Social Development insisted it knew of just one person impacted by the Six60 gig and had made other arrangements for them.
"Ultimately, we want to ensure everyone in need of safe, secure housing has somewhere to stay in the immediate term," said acting regional director Kiriwai Jones.
Mr Houghton says the Resource Management Act needs to be broader to avoid dangerous makeshifts, and allow more permanent, affordable housing.
"Otherwise people make these very dangerous add-ons for houses - cords running out from the house, with no toilet or appropriate shower facilities."