Otago Property Investors Association Inc

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How the next Government can help tenants

We hear many ways each political party talk about the housing crisis, and their solutions to fix this. Adding a new tax to rental property provider and adding more RTA rules to make it harder to supply is obviously not the answer.

All of them 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 LVR’s and tougher CCCFA lending criteria are all topics that put restrictions on supply and make the attractiveness of providing a rental property rather unattractive!.

Tim Horsbrugh, Executive Committee member of NZPIF and President of the Wairarapa Property Investors Association has suggested to solve a problem we need to ask “WHY” 4 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 NZ and why are rents so high ?

A) High Cost to provide a house, whether it’s for a rental property or a home owner.

Q) Why? A) High cost to build, high land cost, high consenting cost, high insurance, high rates, high cost of finance, high risk with less control over tenants, low ROI, high taxes, lack of supply and unpopular to be a landlord.

Now 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 then help implement these solutions to make positive change over time. Solutions can be many things like creating more competition in the building material supply market and less 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 $130k, but it costs $250k for the land and $50k for services and consents, our cheap house has just become expensive. We do need to look at the RMA to help our 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 Govt 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 so the banking industry may not be happy.

Building new homes, with cheaper materials, on cheaper land, with less 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.



About the NZPIF.

The New Zealand Property Investors’ Federation is the parent body for affiliated Property Investors Associations representing approximately 7000 property owners and is responsible for educating and supporting landlords to ensure New Zealanders have access to high quality rental properties.



For further Information contact

Tim Horsbrugh – NZPIF Executive Committee member – 021992628

Peter Lewis – NZPIF Vice President - 0274520511

Sue Harrison – NZPIF President – 0275479739


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