The Government’s reforming tenancy law—but almost nothing’s changing for Generation Rent.
In the wake of the tax working group’s refusal to address the capital gains at the root of this housing crisis, young professionals are again reminded of the remaining three paths to home ownership: The first, and easiest, is to have rich parents give us money. The second is to get lucky on a Kiwibuild ballot, then spend the majority of our income on a mortgage for the foreseeable future. The third is winning lotto.
With such bleak outlooks, it’s no wonder we’re Generation Rent.
Unfortunately for my generation, the Government’s proposed changes to the Residential Tenancy Act are more proof that it isn't prepared to make meaningful progress on the rigged housing market.
The Government says it wants tenants to be free to "stay in their homes as long as they decide to", yet they refuse to even consider challenges to the Evict-to-Occupy provision.
This provision allows property owners, including subsequent purchasers, to evict tenants to take up residency themselves.
To the Government’s credit, they have proposed increasing the notice period for such evictions from 42 days to 90 days. This would guarantee security of housing to families—at least for the next three months.
That is not good enough. Getting kicked out after 90 days is not much better than getting kicked out after 42 days.
We need real security
The evidence backs up what we already know as common sense: secure housing is associated with better social, educational, economic and health outcomes for children. When a family moves house, they become socially displaced, cut off from the neighbours and local communities that they rely on for support. The impacts are even more pronounced for children. More than three moves before the age of five is associated with higher language and literacy problems.
In New Zealand, the only way for families to guarantee a home is to purchase a house. Until then, people have to put their lives on hold. Maybe this was acceptable when land was plentiful and loans government-backed, but that is no longer the case. We currently have some of the most unaffordable housing, relative to income, in the OECD. Is it any wonder, when renting is such a raw deal?
It doesn't have to be this way. In 2017, TOP campaigned on emulating successful European countries, where housing is seen as a part of the country’s social infrastructure. In Germany, landlords must show a compelling need before they can evict to occupy, tenants can object on the basis of undue hardship, and in any case can seek a grace period of up to a year from the courts. Furthermore, tenants can contract to exclude the landlord’s limited right to evict-to-occupy.
As long as tenants pay the rent and don’t trash the place, landlords can’t kick them out. Nor can they hike up rents unjustifiably, rent rises are capped at local averages, and even then can only be raised by a certain amount per year.
We haven't had need for these protections in the past, because New Zealand did not have such a large gap between rich and poor. But thanks in part to a rigged housing market, we’re fast returning to class divisions that many of our ancestors fled.
We already dish out our biggest tax breaks to property owners. At the very least, we can give renters a few rights of their own.
But we’ll need a party that’s willing to do it.