The recent ‘Sunday’ television report on Queenstown’s rental housing shortage highlighted a nationwide issue in New Zealand: the diminishing availability of rental properties. An analysis of the tenancy services data shows a consistent decrease in new rental bonds since 2013, with a significant drop from 2019 onwards.
As of March 2023, there are 402,195 active rental bonds, indicating a stagnation in the growth of the rental housing stock. With immigration increasing, a serious shortage in rental properties looms.
To address this, the incoming government should take several immediate actions:
1. Reinstate tax deductions for interest as a legitimate business expense to dis-incentivise rental property owners from exiting the market and to motivate new owners to enter the rental space.
2. Modify the Residential Tenancies Act changes that deterred landlords, including reinstating the 90-day notice without a stated cause for tenancy termination, which will not affect conscientious tenants.
3. Lower the barriers for investment in residential properties by removing the necessity of a 35% deposit by the Reserve Bank and the practice of banks considering only 70% of rental income in loan assessments.
4. Allow time-limited fixed-term tenancies again, especially for owners of holiday homes, so these can be rented out during the off-season without the obligation of turning them into indefinite-period tenancies.
5. Facilitate urban development and infrastructure through town planning reforms, like permitting smaller lot sizes and streamlining planning processes to reduce land and housing costs.
6. Incentivize construction companies to build more houses, including speculative builds, and ensure tradespeople remain in New Zealand to increase the supply of affordable rental housing.
The housing policies of the previous government have had adverse effects on immigrants, families and young people who rely on rental housing. It’s crucial to reverse these policies to ensure access to basic needs like housing, which is essential for the country’s overall prosperity. This aligns with the understanding of human needs for stability and shelter, as highlighted by Maslow’s hierarchy, and is acknowledged by political parties like ACT and National in their campaigns.
Contrary to some economists’ views, investing in housing should be seen as a fundamental enabler of a thriving society.
Statistics are from the Bond Centre, Tenancy Services