Pampering landlords has been a consistent feature of New Zealand economic policy by successive governments.
Leaving housing to the market has meant plenty of quality homes and good choices for higher-income tenants and families but the reverse for everyone on modest and low incomes.
Today’s housing crisis means impossibly high rents and steadily reducing quality for private-sector tenants.
Housing is grinding modest income New Zealanders into the ground. Here is some background:
The average rent for a new agreement increased by 5.4 per cent in the 12 months to December, 2017, from $426 per week to $449 – according to the Ministry for Business, Innovation and Employment.
This isn’t massively out of step with increases in recent years. In the past decade the average increase over any 12-month period has been 4.1 per cent and in the 12 months to December, 2016, rents increased 7 per cent, on average.
People can’t pay these rents but instead of imposing rent controls on our broken, dysfunctional market, Labour and National governments have use taxpayer money to subsidise grasping landlords and their criminally-high rents.
We pay $2.2 billion of taxpayer money in rental subsidies each year through the accommodation supplement.
At the time National increased the accommodation supplement by $254 million in last year’s budget, estimates were that 30% to 78% of the increase would go direct to landlords as they hiked rents.
We also subsidise landlords through having no effective capital gains tax. In fact the unearned income from capital gains is often so high some landlords don’t bother to rent out the houses they have bought for purely speculative reasons.
The best estimate we have for our rental vacancy rate is 6.6% in Auckland which means 33,000 homes without tenants. It also means more landlord subsidies.
As we head into winter and the squeeze comes on low-income tenants and families the government is set to pay $37 million for emergency accommodation for people without tens of thousands of homes lie empty.
This is insane.
Not only are we subsidising exorbitant rents as landlords use the housing crisis to hike rents to the maximum they can change but we are also subsidising landlords with tens of millions to provide alternative accommodation because so many are land-banking homes they own. The bastards.
Whichever way you look the government is subsiding some of our biggest bludgers who use homes as commodities to buy and sell for profit while families live in cars.
Our housing market is broken, dysfunctional. Instead of rent controls, an Empty Homes Tax and a comprehensive Capital Gains Tax the government is rewarding landlords with massive government subsidies and tax-free unearned income while wage and salary earners pay far higher tax rates through income tax and GST.
Will this Thursday’s budget end this landlord bludging? Don’t hold your breath.
Actually the biggest reason for the accomodation shortage is a lack of small hence affordable homes.
And the biggest reason for that is homeowners/ratepayers not wanting any cheap houses for riff-raff near them, so lowering the neighbourhood’s property values. Councils hear their ratepayers far more loudly than possible future renters or owners, so make development and infill difficult.
While I agree landlords get preferential tax treatment, you have to wonder if it’s so good being one, why is there such a shortage of landlords and houses to rent out when a decade ago with the same tax laws there were plenty of houses to rent and rents and mortgages were not taking up most of people’s wages?
The answer is, to keep neoliberalism going they needed more people to create competition so at the same time of rising house prices it also reduced wages.
The relationship between wages and the cost of living is what has become dysfunctional. Even if you have zero rent to pay, just paying power, water, transport, rates, food, and so forth makes it hard to survive. Also now there seems to be new essentials, internet for example.
If it was just about landlords routing the system then there would be a lot of houses to rent due to the amount of landlords. That does not seem to be the case.
Also we have all been fed the neoliberal lie that land prices is the problem and the democratic process has been taken away from people aka Supercity and Unitary plan to ‘help affordable housing’. Since then it’s done the opposite, make land more expensive and the Kiwibuild has highlighted how even with free land from the government then a one bedroom is costing an eye watering $550k to build!
When they seem to be importing in 4 people for construction workers and their families who all need housing while they build the housing and taking away housing from the people who need it – it’s stupidity at it’s finest… And if the housing is sold, that’s another asset sale of public land lost with the tax payer paying for it’s build.
Things like Housing for Habitat use unskilled labour who help build the house… there are plenty of other options available rather than the neoliberal way… that does not seem to work.
Why is there such a shortage of landlords and houses to rent out when a decade ago with the same tax laws there were plenty of houses to rent and rents and mortgages were not taking up most of people’s wages?
It’s very simple – landlords don’t build new housing stock, population growth and a drop in new house builds by government.
Our government used to build thousands of houses every year because the private sector will only invest in housing stock for high returns.
The majority of Kiwi’s can’t afford the houses the private sector builds.
We have static population growth in NZ. The rise in population is not natural unforeseen phenomena. It’s deliberate.
So the government deliberately stopped building state houses and also started selling them off!
The government deliberately threw out all the rules on immigration and give out as many work permits to students or anyone else to lower wages in a “business friendly” way to lower inflation while making worker exploitation part of the NZ landscape.
They then had to add a whole lot of government subsidies aka WFF to help top up the lowered wages so nobody would notice.
If you go to build a property you will see why nobody will be building affordable housing, our rip off culture means it costs more to build here than OZ and the US per square meter. The government rather than using regulation is just topping up the rip off culture.
So we are selling our existing houses and have a rip off culture to build new ones.
The housing crisis has been deliberately cultivated by government policy and it’s been going on for years.
Blaming landlords is just giving a free pass to government policy and not tackling the multiple problems at source.
Excellent article – nails it. The banks are 100% dependent on this molly coddling of landlords. Any hint of control or constraint on the private rental market could lower house prices and put the billions in NZ mortgage debt at risk. Should the value of NZ housing stock fall marginally either through regulation or an overzealous start to Kiwibuild that actually lifts housing supply, the economy would face financial shocks. So don’t hold your breath for action from the current government.
For some reason there are massive numbers of Kiwi voters who believe this government funded investment vehicle is an untouchable, sacred cow that is some sort of un-deniable middle class right of passage.
Yes John Minto
The Government must declare all Rentals as Shared Ownership Between Landlord and Government.
Along with that The Government must declare a realistic low rate Rent.
The Landlord will he held to absolute Maintenance of the Rental and will understand that should he fail, he will be jailed for a significant period for breach of duty.
Robbing the Poor by any means, by any one, will be listed in the same category as Murder and will treated as a life long sentence.
Finally, The Government will Pass Legislation that no alteration will be made to the new Rentals Legislation for Five Hundred Years.
It looks like the Register of Pecuniary and Other Specified Interests of
MP’s,31 January 2017 needs up dating.
Over 130 properties/rental making a killing in capital gain(s) for them. Be good to see what the split is now between the partys.
https://www.parliament.nz/media/3926/2017-summary-report-final.pdf
Timing they say is everything. Fresh off the printing press today! The 2018 MP Pecuniary Interest list:
https://www.parliament.nz/en/mps-and-electorates/mps-financial-interests/mps-financial-interests/current-register-and-amendments/
A quick count, about 196 properties owned by the oligarchs! Obviously the Nat MP’s have got a head start on the Labour MP’s, with the exception being the ones who’ve been at the trough longer.
Maybe the MP’s with rentals & second homes, farms & apartment blocks(FFS!) will lead the way for a Stamp Duty on every other property but the family home!?
Just about time to throw the fake left under the think tank tracks. Sausage meat
2.2 billion annually to subsidize landlords is a significant amount of money. Will it be addressed as an issue ? Unlikely.
It’s actually a moral issue, and this govt will address moral issues when they are the focus of sustained targeted campaigns eg The tragedy of the Pike River miners; the tragedy of the Tirgiran Valley peasants.
I tell myself that the Labour Govt is addressing these majorly moral issues, and that they should be applauded for that, but the fact that NZ taxpayers are subsidising and helping enrich landlords doesn’t have the same emotional human capture – it could be done if some singular politician had the will, but they’re largely diverted by self-serving niche interests.
Just how could it help promote fair rental housing when one subsidizes the most egregiously exorbitant form of commercial rent gouging, Hotels?
Why, given that landlords apparently don’t feel the need to go into details on programs that aren’t profitable? Is there a reason for that?
$2.2billion to subsidise landlords, but of course at least half of them are mortgaged to the hilt and passing this money straight to the Australian banks (which export $4 billion in profits annauly).
Instead of paying $2.2billion in accomodation supplement the government could just build 4000 x $500,000 affordable homes every year. Those homes could be rented or sold. Either way it would put a lot of downward pressure on rents.
Of course the immediate answer to winter homelessness rather than pay exhorbitant motel/hotel nightly rates is to requisation some of the thousands of beach houses lying empty all winter.
Wow looks like being a landlord is so easy and such a huge money making scheme…makes you wonder why don’t all these people that despise landlords buy their own rental properties and rent them out to the most needy at $5 a week?
How are they gonna do that when they can’t save anything? Not everyone has a rich Mummy and Daddy BG
I’ll be at the mercy of ruthless, greedy landlords until I draw my last breath, not a pretty prospect. They’ve been the bane of my existence, sure some of my Irish & Scottish ancestors would agree!!
These landlords definitely need their wings clipped. While we’re at it land reform should also be high priority. The landless among us sure would welcome moves to collectivise & set aside some crown & local body owned land, for communal housing & food production.
Yeah Right !! Communists tried Collectives and these failed badly.
People with some intiative / ambition do not want to be forced into some association with bludgers / whingers.
There is a segment of the population that actually wants to live in a home for years and years. These people, whether owners or renters, are not interested in speculation or ‘the current valuation’. They have neither desire nor capacity to ‘borrow against the value of their home.’
Yet along come the valuers and claim that a modest home has suddenly become ‘worth’ an unrealistic amount.
At which point – the rates go up – regardless of whether either home owner or renter can afford to pay.
There is therefore a further flaw in the system, back in the arcane world of local government.
We can blame national politicians and ‘write to our MP’ – yet flies batting against windows have more effect than citizens trying to get through the baffles of local government. Do you deal with the bureaucrats? Or the front people – such a mayors and councillors?
The entire system seems to be set up to extract maximum fleece from the shivering public.
And, while I’m on a rant – state housing. Why not for life if you fit the criteria? And we could do with many many more single unit and disability adapted places as well.
Keep on, John Minto. This entire fudge needs spreading on the tray and looking at closely.
Yes I agree with you Andrea. People who need housing should be able to rent a state house as long as they need it, they pay their rent , they look after the place. When I rented a HNZ place they use to check the house yearly and there is nothing wrong with that. I looked forward to the visit from an inspector cause I would have list of things that needed to be fixed. Then HNZ changed the system to a quality…? something check and they never fixed anything they didn’t have to and this happened under both the gnats and labour. This was how the state housing stock got run down lack of investment and maintenance.
We desperately need good quality social housing for our aging population, our mentally ill, our poor, our single parents, our prisoners and possibly other groups.
We will never reduce the prison population if the prisoners have no where to live.
We should not be selling our state houses either the national government did most of this (selling) every time they get in power they sell not just our houses but good land and they sold lots just before the last election. The national government want the poor to disappear now the old slum like state housing areas are fill of 500 k plus homes. This is bloody disgusting and its not right and it never should happen again.
If the vacuous Julie Christie can rustle up quality housing for a reality TV show in a few months, you would think all the powers of the state could conjure up some housing within the same time frames, renovate the existing state housing blocks or make a phone call for a tiny house ($95k all up fully built and delivered against a 1 room hotel costing $50k pa) to put on state house land.. to ease the crisis.
Ofcourse that does not divert the many construction firms and consultants at the teat any public money, which might be where the problem lies as it’s just about delivering quality cheap housing that is also cheap to heat and maintain which does not make the utility industry happy.
https://inhabitat.com/luxurious-off-grid-tiny-home-in-new-zealand-is-100-self-sustaining/
http://nztinyhomes.com
http://www.diyhousebuilding.com/tiny-house-trailer.html
(These look a lot nicer and cheaper than a 1 room hotel at great expense!)
Personally I might actually switch on my TV if I could see Mark Richardson dirty his hands on a state housing block reality TV show co hosted by Sue Bradford where they get the tenants to pitch in and renovate them in a few months, sponsored by all those building firms and companies. Could be a winner for TVNZ…
Oh! And theyre still spending $140,000.00 per day on Emergency Accommodation. FFS!
J.A. Lee built 3200 Houses in 1930’s for his ozzie boss M.J Savage. A Maverick he called him, but fuck it! He made me a working class hero! Then somehow the maori buried me on their whenua on Bastion Pt. Did anyone ask the maori if that was kapai?
Why does this “newspaper” publish rubbish ? Minto is insane and full of hate. I am a small Landlord And I can state with honesty that dealing with some tenants has been a nightmare – some people are not fit to live in a house. I am on-call 24/7 for any & all problems (not that many as my houses are all liveable – insulated, safe, everything works, heat pumps installed, etc). I charge reasonable market rents or just under as I do not want tenants to leave. but with the current “PC” bullshit re greedy landlords and potential extra taxes – I will give up and sell, when tenants leave of their own free decisions. Just too much work and expenses.
What other countries are doing about rising house prices beyond local’s means…
Vancouver’s Hot Housing Market Gets Tougher for Wealthy Chinese
https://www.bloomberg.com/news/articles/2018-02-20/british-columbia-extends-housing-crackdown-with-tax-increases
Biggest beneficiaries and biggest whiners.
We don’t have market rent anymore. Its a government subsided price fixing scheme.
So Helen Clark and Michael Cullen are both leeches?
Because they’re both landlords…
In case you missed this;This is not a rant, just what I have experienced. I am convinced that the NZ “Housing Crisis” is NZ realtor Industry created.
There’s a lot more effects going on than unaffordable rent. The social environment for renting a home is being pressured at a time when most formal, ( and informal) assistance to own a home in NZ has been withdrawn.
At its outset, since colonization by Western Nations, and now by inter-genrational and racial co-operation, the NZ housing distribution policy was and remains “home ownership first”. Copious acadmic analyical theory supports this and condemns social policy which threatens this business status quo. There is plenty of protest and support for creating public housing, it is just ignored, or voted against by enough NZers to result in such policies being overruled, watered down to ineffectiveness, or regulatory captured enough by the weathier to exclude applicants whose income levels make them “unattractive” as Realty clients. People on really low incomes or are homeless are “invisible” except as “media fodder”.
This has not changed despite the withdrawl of all but residual government assisted home ownership, or ocupancy assistance in the early ’80s. In NZ, By default, “Home owners” as a social group also enjoy an enhanced social regard just for being real estate “property owners”.
Distribution policy about home finance and public housing has been reformed in ways which now lock many people out of particularly residential property. Recent statistics say that (being generous) the approximately 60% of NZ residential properties are owner occupied, by a ratio of under 50% of the NZ population…This is further exacerbated by property managers and vendors using business protocol and marketing administration to close off home making opportunity for increasing numbers of the NZ population, and supporting this activity by using theirs and their client’s votes to frustrate any reform which places a “human rights” framework around access to housing in NZ.
The rhetoric against the section of NZ population placed “outside” home ownership, and particularly those who call for reform to include a “human rights” perspective upon “access to a home” has become more vitriolic.
All manner of covert and obvious tactics are used in the residential tenancy industry, from price gouging tenancy applicants, using tenancy application processes to “data mine” and more, such as gaming the media to discredit protest and futher victimisation of people being denied access to a home, and maintain the status quo.
Here are some egregious examples pertaining to the residential rental industry;
(1) Real Estate advertisements on Trade Me- Agents advertising “less desirable” real estate products for rentals at slightly below market rental. This “games” media consumers into thinking that “affordable properties” are “out there” and unsuccessful applicants are “unworthy” or need to just “try harder”.
Another reality is that NZ Realtor Agencies can also use sales processing to “soften up” property owners who apspire to becoming landlords; for a sale by starving them of tenancy applicants, especially in the instance of cheaper properties, or single “average condition” property portfolio property owners. Turning a profit by managing a run down property is really a liability for the NZ realtor, especially since attention is being drawn to NZs damp run down housing isssues. The realtor professional has little economic incentive to “do” “affordable”, unless it is en masse. No infrastructure reform has happened to promote “affordable” housing for anyone except “the most needy”; which is a social policy littered with social justice pitfalls and creates real poverty traps. The majority of the public and the NZ RE Industry see nothing wrong with this, since the negative outcome for NZers is “social” not “economic”. People who cannot afford to live indoors are not viewed a economic assests by the NZ business community.
The second stage of the realtor sales process for “affordable homes” process is to treat all of these applicants with indifference.
Using Trade Me to advertise the property, the professional realtor sales technique continues by the vendor/agent “ignoring” applicants to the (ususally run down or “less than market value”) advertised property for an extended period – often up to 4-6 weeks or even withdrawing and readvertising the same property, spinning the application stage out) until the numbers rise into the hundreds or even thousands of applicants for a single property. (the 3ft lawn and the messy interior help the property owner make the “right” decision, and discourage all but the desperate, (insolvent) applicants) Realtors also require applicants to register their interest online through application forms demanding intimate personal details – income details,copies of identification and immigration/ welfare documents, employment,credit history etc, multiple landlord and personal references etc in order to obtain an interview, or property viewing time details, which may or may not be followed through by the agent. Often a limited number of applicants are contacted for a viewing.
Sometimes, but not too often a “house viewing” for a run down property is advertised without applicants having to apply.
Apart from but not exclusive to those viewings which are organized by landlords selling outside of agencies, attending a viewing does not necessarily result in the property being let. In one recent personal experience (at a viewing by a private landlord) “nobody” got the property. There were many applicants. Although the vendor advertised on Trade Me most activity was conducted outside of Trade Me sales settlement rules.
With no intention to let the property this landlord held 2 house viewings, of which we attended the first. He collected applicants data and interviewed them. The landlord just wanted to see how much he could get for the property, who applied and weather it was “worth while” to rent it out. By admission the landord self managed “other properties”. We were considered “at the top of the list” but were informed at the 2nd viewing that the property “went to a relative”.
Applicants are not “fools” who willngly pay huge sums for “slums” but are those who are caught between overly stringent and unfair selection criteria and business practices and greedy realtor expectations for what are essentially run down properties realtors would rather onsell or not deal with.
In some instances (particularly in the instance of a run down property) viewings are used as a “market testing” tool; by landlords and realtors or to facilitate a “rent auction” amongst applicants, or for realtor data collection. It is open for speculation as to what other uses this data base is put to.
Tebdering is a common way that houses are sold. With the tightening of public housing eligibility criteria, the affordable housing market is supposed to be reliant on the private rental industry.
There are social consequences if this practice is applied by NZ realtor professionals against applicants access to an essential resource like “affordable” housing, and to applicants who may or may not be taking up space in emergency housing or facing homelessness?
Allowing rental tenancy auctions has a similar effect to introducing Pokie machines to socially and economically deprived communities, with the exception that individuals have a “choice” to “play the pokies” that they do not have when applying for a residential tenancy. There is a public outcry when “pokie machines” are placed in a so called low income community. A similar outcry should be generated when realtors apply the auction process to “affordable” housing applications. Regluation reform to make rent auctions as a way of marketing residential tenancies illegal would be a huge step to adressing the human rights of residential tenancy applicants in New Zealand.
In instances where applicant numbers are built up,using the aforementioned processes receruiting software is used for tenant selection, in which the screening criteria is not transparent, and is used to screen out applicants who would normally have grounds to sue for discrimination if the eligibility criteria was publically available.
(2) Quote; https://www.radionz.co.nz/news/national/331952/auckland-agency-price-gouging-over-weekly-rent-rise
“One of Auckland’s biggest rental agencies hiked rents on vacant apartments by five percent a week for several weeks earlier this year when demand from students surged to record levels. “We were getting 30 to 40 applicants turning up to a one or two-bedroom apartment, and all with good credit history, and testimonials and landlord references.”
“So the only response was to put the rent up,” Mr Samuel said.
“For the landlords that we were representing, and we represent about 1000 individual landlords in the city, we were putting the rent up about five percent a week, week on week for about six weeks.”
“We’re in business so our job for our individual landlords is to firstly provide them with a vetted tenant who’s going to pay the rent and not cause any damage to the property.
“Secondly, these are investors who purchase these properties to fund their retirement or fund their lifestyle … so our job with them is to get them as much as possible with a quality tenant in place.”
This flies in the face of media statements by landlord spokepeople that residential rents do not cover the costs for landlords.
(2) Public and social housing properties are administered in ways which often “make life hell” for the tenants. Often housing managers put onerous lifestyle restrictions on tenants, such a “a no visitors overnight” (even relatives) or restricting visitor numbers and implementing visitor curfews, or restrict children visiting,or even vistors accompanied by a pet ( eg a dog) or if a vistor can park, also restrictions on hanging pictures,such as family photos etc and requiring onerous permissions to cultivate a garden, or to even hang washing out or where or if they can have pot plants, or a chair on the verandah. Many HNZ properties are located in mixed tenancy/ owner- occupier neighborhoods. Any victimisation of the tenant by another ( particularly home owning) resident is expected to be accepted by a public housing tenant. They are ususally told to “suck it up” and avoid conflict, while complaints against the (eg HNZ) tenant are often upheld. It is common for the neighbors to form complaints mills against HNZ tenants in housing complexes or in the vicinity, and even blame social and public housing tenants for incidents such as vandalism, and crime caused by non- residents; often with the aim of driving sucessive tenants out of the property. The facts are rarely investigated on behalf of the tenant, and tenats are a soft touch, particularly since they have no voice or presence at body corporate meetings.
Creating the concept that public and social housing is a last resort measure, is often interpreted by an increasing section of the public as being a “permission” to treat public and social housing tenants badly, and believe that public housing tenants should demonstrate how “grateful” they are to not be “on the street” by being “willing to put up with anything.” Only a government sponsored high profile human rights education and awareness programme,exposing real estate bullying ( or mobbing as it is referred to overseas) advocacy scheme, similar to that used to stamp out family violence, and smoking will mitigate this situation. For example that which was created by public housing tenants in Seattle, http://www.renterharassment.com/real-estate-mobbing.html
This type of activity is alive a well, but ignored in NZ communities. Tenants have nowhere to go to get help. peer to peer and neighbor conflict is ignored by the NZ Tenancy Tribunal and out of the scope and funding precriptions of NZ advocacy groups to deal with. Tenants are often encouraged by advocates, and even Police when attempting to report an incident to simply “move on” and “forget”. In NZ, neighborhood victimization of social and public housing tenants is a common cause of homelessness and eviction from social and public housing.
Structurally Home owner/ occupiers and even people renting privately are encouraged to “feel superior” to people living in public, and to a lesser extent social housing. People living in these neighborhoods are encouraged by both social and economic means to resent those people living in the much fewer, and cheaper public (HNZ) properties located in their neighborhoods. I have lost count of the number of experience I have witnessed where property owners personally take their resentment out on tenants occupying their local HNZ properties making sure in many overt, and covert ways – usually via a localized informal ‘bullying’ rings- which engage in stalking, regulation bullying and harassment, ostracism and petty vandalism designed to make the occupants of HNZ properties in their localities feel unwelcome.
In New Zealand, often residential rental properties are managed in ways which discourage tenants from feeling like “homes” for the tenants. They are treated as “profit centers” for the NZ Realty industry. Property owners are the NZ realtor’s customer, and residential tenants are their material resource. It is a ‘lifestyle’ reality for many NZ residential tenants that the NZ residential rental property takes the form of a legally unmitigated “workplace” 24/7 which views residential tenants as “paying economic units”, who occupy the premisises at the convenience of the property owners and Real Estate Industry.This quote refers to rental tenancies in the 1930s,but comments that these social conditions are returning;
Quote-Housing with a focus on human need https://iso.org.nz/2018/02/23/the-housing-crisis-hits-again/
“rent, just like wage labour, is shaped by class struggle. Just as bosses exploit workers in the workplace, landlords exploit tenants through rent. And housing, just like the workplace, has seen ebbs and flows of class struggle over the decades. Niki Rauti’s battle in Glen Innes last year put the question of state housing – and the redevelopment of Auckland for the rich – at the centre of national discussion. She was joining a long line of class fighters for housing….
Even with an increase to state and social housing however, it’s not going to do away with the fundamental inequity of rent. As long as there is a focus on housing being a form of investment, rather than human need, then housing will always be in crisis.
As British socialist David Renton explains the private housing and rent is a form of exploitation of the working class with the onset of the industrial revolution”
Overseas in other Western countries many of these practcies are illegal, or have been forced out by regulation and social reform. While every NZ property owner does not behave badly toward their tenants, too many still do. NZ is a “bad” Realtor’s “haven” None of the above practices are condemned.
Question is- WHAT ARE NZ ERS GOING TO DO ABOUT THIS? so far it has been J**K S**T. The population section affected by these circumstances is not yet greater than those who are “doing quite well” out of this situation. So long as the majority of voters are encouraged by circumstances to support the NZ status quo, it is difficult to see a way ahead.
Comments are closed.