10 ways to fix a crisis

New Zealand’s housing and rental problems are mirrored across the Tasman. Would Australia’s solutions work here? Miriam reports.

Eighteen months of falling house prices have eased some pressure on the market, but not enough to put an end to the country’s housing crisis.

Affordability remains an issue for many home-buyers, and there is still a shortage of rental and public housing stock. That means many people struggle to find homes.

With migration booming, demand for housing is expected to increase, and that will add to the existing pressures, including the cost of rent.

This situation is not unique to New Zealand, with Australia also dealing with a significant housing crisis and high migration.

In Australia, there is a shortage of affordable housing to buy, and very limited rental stock, particularly in the main cities.

A range of policies are being touted to address those problems. Would any work here?

1. Caps on annual rent increases

While rent controls are found in some parts of Europe and the US, New Zealand and Australia do not have them. Questions have been raised about whether rent caps would help across the Tasman, as rents rise.

Early last year there were hints the New Zealand Government might be considering some type of rent controls, too, but none eventuated.

Renters United has long said it wants the Government to set controls to ensure rent increases are limited to inflation, unless there have been meaningful improvements to a property.

Green Party co-leader Marama Davidson says some type of rent controls should be used as a tool to moderate cost increases while housing supply is increased, and Te Pa¯ ti Ma¯ ori wants to introduce rent controls.

Currently, rents are on the rise in New Zealand, but at a slow pace. Stats NZ’s latest rent figures showed an increase of 2.8% in the year to April compared to more than 10% in Australia. Following tenancy law reforms, landlords can only raise the rent once a year.

2. No-fault eviction controls

Australian states are moving to ban no-fault evictions for tenants on rolling leases – something that is already in place in New Zealand.

When the Labour-NZ First coalition Government overhauled New Zealand’s tenancy law, it banned the use of ‘‘no-cause’’ notices to end tenancies.

Housing Minister Megan Woods says tenants have rights too, and it is about giving them more protection. ‘‘It is about ensuring families have security of tenure, and can put down roots in their community.’’

Landlords can apply to the Tenancy Tribunal to end tenancies if the rent is unpaid for over 21 days, or in cases of repeated antisocial behaviour from the tenant.

They can also give a tenant notice if either the landlord or a family member needs to move in to the property, or if they are selling it, or embarking on extensive alterations.

But many landlords are staunchly opposed to the policy, and National and the ACT Party say they will re-introduce nocause terminations if elected.

3. Rent assistance

The Australian Government bumped up the level of rent assistance in its latest Budget.

In New Zealand, Work and Income offers help to pay the rent via the accommodation supplement. The supplement is not available to people in public housing.

Work and Income can also provide a rent arrears grant in some cases. Bond and rent in advance grants are also available, depending on the applicant’s income and assets.

Assistance for public housing tenants comes in the form of the income-related rent subsidy. Tenants pay an income-related rent, with the amount generally set at 25% of their net income.

The Ministry of Housing and Urban Development (HUD) pays a subsidy to Ka¯ inga Ora and community housing providers to cover the balance between the tenant’s rent and the market rent for the property.

4. More public housing

From around 2010, the National Government sold, or converted, a couple of thousand public houses, and this reduced the stock available.

The current Government has been building more public housing stock. There are currently 78,064 public homes, an increase of 11,918 since June 2017.

Between June 2017 and March this year, 16,308 new homes were built by Ka¯ inga Ora and community housing providers, and there are now 7103 under construction.

In the Budget, the Government announced that it has allocated funding to build an extra 3000 public homes by June 2025. Woods says this will help maintain the pace towards delivering more housing.

But there are currently 24,080 households waiting for public housing, according to HUD’s latest figures.

5. More student housing

Traditionally, student accommodation in New Zealand has been dominated by private scarfie-style flats, or tiny Auckland CBD apartments, but there is increasing demand for on-campus accommodation.

University of Auckland deputy vice-chancellor Adrienne Cleland says there were more than 8500 applications for 4500 hall of residence beds last year.

But there are moves towards introducing new models of accommodation for students.

In Auckland, the US-college inspired Carlaw Park Student Village opened earlier this year. It is made up of self-contained apartments, and can house up to 1600 residents.

The cost incorporates apartment rental, utilities, internet and gym membership, and University of Auckland research suggests it is around 17% cheaper for students than living in a private flat off campus.

Ergon Properties director Kim Barrett, which owns the Carlaw Park Student Village, says they are looking to expand the model throughout the country, and are in conversations with other tertiary institutions.

6. Increase market-rate housing supply

It is widely accepted that increasing housing supply to meet, or exceed buyer demand, will help rein in house and rent prices.

In Australia, height bonuses and tax incentives for developers who build denser housing, such as townhouses and apartments, are being suggested to help drive an increase in supply.

In New Zealand, the National Policy Statement on Urban Development was implemented by Labour in 2020 to allow for greater intensification of housing in Auckland, Wellington, Christchurch, Tauranga, and Hamilton.

It is supplemented by Labour and National’s bipartisan agreement on new rules aimed at boosting the supply of medium density housing in urban areas.

There are also incentives to encourage more people to buy new builds. Lower deposits are required for new builds, and they are exempt from the Government’s new rules around interest deductibility for rental properties.

7. Encourage ‘‘auxiliary’’ units

‘‘Auxiliary’’ units are smaller, secondary homes built on sections next to existing houses, and they include granny flats, sleepouts, portable cabins, and tiny homes.

The medium density standards will enable additional dwellings to be built in the front or backyards of sections more easily, and for a lesser cost.

That is because to do so no longer requires a resource consent, although a building consent is still necessary.

8. Requiring inclusionary units in developments

Developments with inclusionary units offer homes for sale at below-market rates.

The Government’s ‘‘buildready development pathway’’ requires the developers involved to include some affordable homes.

Developers working in other types of partnership with the Government will also include affordable homes in the build.

Marutu¯ a¯ hu Ockham has partnered up with HUD’s Land for Housing programme for four contracted developments. The partnership will deliver 541 apartments, including 199 KiwiBuild homes.

9. Providing transitional housing

Transitional, or emergency housing, is temporary accommodation for people or households who do not have anywhere to live.

At the end of March, there were 5849 transitional housing places available, according to the latest HUD figures. That compares to 1123 places in June 2017.

There were 3363 households in emergency housing in March, and people currently in emergency housing may also be on the housing register, an MSD spokesperson confirmed.

But the quality and safety of emergency housing has been controversial, as has the length of time people often spend there.

10. Financial incentives

First Home Grants and Loans are available, via Ka¯ inga Ora, to people who meet the criteria.

The Government recently increased the minimum First Home Grant house price cap for new build properties, and last year it removed the price caps for First Home Loans, and lifted them on First Home Grants.

A Progressive Home Ownership scheme, which helps low-income families into homeownership by supporting them with ‘‘shared equity’’ arrangements, was launched in 2020. To date, 335 households have been through it.

The Labour Government has also introduced tougher tax policies for property investors in a bid to rebalance the market back to first home buyers.

It has extended the bright line test, which taxes profits from the sale of an investment property, to 10 years, and removed the ability to deduct mortgage interest on rental properties from taxes.

Landlords are staunchly opposed to the interest deductibility changes, and National and ACT say they will reverse them if elected. National will also return the bright line test to two years, while ACT will get rid of it entirely.