[OPINION] How the next Government can help tenants

We hear many ways each political party talks about the housing crisis, and their solutions to fix this. Adding a new tax and tougher RTA rules to rental property providers is obviously not the answer.

Tuesday, September 19th 2023

By Tim Horsbrugh - Executive committee member of New Zealand Property Investors Federation

We hear many ways each political party talks about the housing crisis, and their solutions to fix this.

Adding a new tax and tougher RTA rules to rental property providers is obviously not the answer.

All of the political parties acknowledge we do not have enough homes and because of this lack of supply and the high cost to provide housing we have higher rents.

Rent controls, new taxes, extensions to the bright line test, new RTA rules, lower LVRs and tougher CCCFA lending criteria are all topics that put restrictions on housing supply and make the attractiveness of providing a rental property rather unattractive.

To solve a problem we need to ask “why” four times to get to the root causes of the problem and then we can start talking solutions.

Let’s start off

Q: Why do we have a housing shortage in New Zealand and why are rents so high?
A: The high cost of providing a house, whether it’s for a rental property or a home owner.
Q: Why?
A: High building, land, consenting, insurance, rates, finance costs, high risk with less control over tenants, low return on investment, high taxes, lack of supply and it’s unpopular to be a landlord.
Under each of these headings we say “why”, then we repeat the process again.

This helps define the actual problems, so we have clarity in what needs to be solved. Solutions can then be provided. Political parties can help implement these solutions to make positive change over time.

Solutions can be many things like creating more competition in the building materials supply market and fewer restrictions and controls around what we can do on our land to create affordable sections.

Think about this? If we can build a tiny house for $130,000, but it costs $250,000 for the land and $50,000 for services and consents, our cheap house has just become expensive.

We do need to look at the Resource Management Act to help councils cut red tape and get on with infrastructure, as the more we regulate the greater the cost.

We also need to look at the banking sector who want to lend but are restricted. Why? Just ask any mortgage broker or developer about the tighter rules around gaining finance.

Just imagine if every builder, developer, land owner could get government guaranteed finance to build one, two or three spec homes. The loan gets repaid once each home sells in an agreed timeframe. This will create movement in the property market, potentially an oversupply but the banking industry may not be happy.

Building new homes, with cheaper materials, on cheaper land, with fewer fees is the key. If we have more supply, this eases demand and the need for rent increases.

Property prices will stabilise, this is the only way to help our tenants. I challenge the next Government to sit down with developers, council planners, bankers, property Investors and tenants to brainstorm the “why” and come up with workable solutions together.


On Thursday, September 28th 2023 5:54 pm Tim@claudatos.co.nz said:

I'm sorry but I think all of the above will not work. We have entered a new "Time Wharp". I don't think there will ever be affordable housing again for all those reasons you state above. The best bank at the moment to help young people is the "Mum and Dad Bank". Mum and dad have all the money and we need to help our kids as much as possible. However we still need to be thrifty, especially the mums who we all know are the best spenders in the family. As a retired couple my wife and I are very comfortable. We have worked hard to acheive that position. We must cover our standard of living off first then the rest can go to our children. Be careful woman not to over spend and leave the coffers empty.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
TSB Special 6.75
Westpac Special 6.75
China Construction Bank 6.75
ASB Bank 6.75
ICBC 6.75
AIA - Go Home Loans 6.75
Kiwibank Special 6.79
Co-operative Bank - Owner Occ 6.79
ANZ Special 6.79
ASB Bank 6.39
Westpac Special 6.39
AIA - Go Home Loans 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

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