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[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, 6:12AM 1 Comment

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.

Tags: Opinion

« [OPINION] New Zealand’s broken property market[OPINION] How to make 20% from commercial property »

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Comments from our readers

On 28 September 2023 at 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.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 ▼6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 ▼6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

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