Families in Napier are being kicked out of their rentals because they are taking in homeless people, a community housing group says.
However, Housing New Zealand said it has not removed anyone from its properties for overcrowding in the past year.
The Community Housing Action Team (CHAT) says homelessness has dramatically increased in the past few years and there are large waiting lists for social housing.
"People are actually getting evicted because they're letting their families or people that they know on the streets come in and stay," said group member Adrienne Taputoro.
"So those families have to go into a motel and try and find somewhere, but even then you still can't stay in there for long."
Ms Taputoro, who was in Maraenui yesterday attending Labour leader Jacinda Ardern's announcement her party would build 240 affordable homes for Napier and Hastings, said there was a dire housing shortage in the area.
She said many people couldn't afford exorbitant rents in the city. "You've got landlords around here that have upped the rent. One guy that spoke to me last week - their rent went from $280 [per week] to $420. The landlords are getting greedy, that's all I can say."
In a statement, Housing New Zealand said it had not ended any tenancies in the Hawke's Bay for overcrowding or other similar reasons in the last year.
"If and when these situations arise, we prefer to have a conversation with the tenant about the situation and reiterate the number of people that are permitted in their property, as per their tenancy agreement," said area manager Andrew Cairns.
"We need to ensure, for health and safety reasons, our properties are not overcrowded - but we do allow tenants time and flexibility to resolve any overcrowding matters."
Tenants who had more people in the house than had been agreed were in breach of their agreement and were given 14 days to fix the problem, it said. The government corporation would then go to the Tenancy Tribunal and ask for an agreement to be cancelled if the number of tenants in the house was not fixed.
The number of applicants on the social housing register - which is for all social housing, including Housing New Zealand - has almost doubled in the last year in Napier. In June 2016, there were 87 individuals and families on the list; that number grew to 125 by December and, as at June this year, there were 151 applicants.
Ms Taputoro said the homeless were taking anywhere they could get a roof over their head, such as garden sheds or garages and some were living out of their cars on one of Napier's iconic roads.
"If you go along Marine Parade, you'll see a hell of a lot of families, and I'm not talking like two or three kids, I'm talking about nine kids with their solo parents or both parents in there... talking about working couples that are actually homeless as well."
Napier mayor Bill Dalton said the number of homeless people in the city was no different to others around the country.
He said Ms Taputoro's observation of people living in cars along Marine Parade was a "gross overstatement".
"Napier, like every other city in New Zealand, now has a homeless problem, which some years ago we didn't have. But to suggest you can drive down Marine Parade and see families living in cars and so on is an absolute nonsense.
"We have an issue, and we need to deal with it as a city and as a country, but you can't possibly suggest that we have families living in cars along Marine Parade, it's silly."
He said the city's homeless people were well known to the council.
"We have a group of people who are homeless that live in the city - there's about a dozen of them. There are some other people with mental health issues that for whatever reason decide to be rough sleepers."
Napier City Council community strategy manager Natasha Carswell wasn't aware of Housing New Zealand tenants being evicted after taking in homeless people.
She said a decision in last year's Budget to make the emergency housing grant non-recoverable - meaning people didn't have to pay it back - had led to more applications for state housing.
"The social housing isn't readily available because there's just not enough houses being built or available for this cohort.
"We're having more and more people staying in motels for longer periods of time.
"People coming out of those situations are struggling to get into even emergency housing. I do think that Adrienne is right in that there are people in these situations."