Beyond renting. Responding to the decline in private rental housing

Author:
Alan Johnson, Salvation Army Social Policy and Parliamentary Unit
Source:
Salvation Army Social Policy & Parliamentary Unit
Publication date:
2018

For the past two decades at least, New Zealand has followed something of a default housing policy. This policy has relied on thousands of small-scale, private investors investing in rental housing as the basis for providing housing to new
households. Private sector renting thus became the tenure of necessity for those households too poor to afford home ownership, and not poor enough to qualify for state or social housing. Over the past five years two-thirds of new households fell in to private sector rental housing.

This default housing policy no longer looks sustainable. This is because of the poor yields which rents have provided to investors, and the diminishing prospects of capital gains on residential property. Most likely there will still be further investment in private rental housing, but this investment probably won’t keep pace with demand. The result will be rents rising faster than household incomes, increasing levels of housing-related poverty and unmet housing need, alongside growing numbers of people sleeping rough on our streets and in our parks and carparks.

This paper considers this prospect and what policy ideas might work in response. The basic argument offered here is that a more deliberate set of housing policies are needed, which will require greater direct involvement by Government. This involvement will be in the provision of more state and social housing, and in the subsidising of home-ownership programmes for modest income households. The paper begins by considering the place that private rental housing has played in New Zealand’s society, including the provision of housing and the accumulation of wealth. It then goes on to consider the prospects of the private rental housing market over the next decade or so. As a basis for considering where we might go as a nation in our efforts to ensure that everyone is adequately housed, the paper provides a brief overview of the current housing policy framework and offers a brief critique of this as well. The paper then concludes with some often quite radical proposals for policy reform.

Last updated: 2018-11-07