Ten years have passed since the 2007/08 global financial crisis. Our company reporting in mid-2008 said: “It’s a headwind with…
I wrote this article while moving from the comfortable three-bedroom home we had rented for four years in town into a 60m2 two-bedroom cottage in the country, with a still-to-complete tiny house in situ.
In terms of stress and disruption, moving house ranks with death and divorce, I’m told. It always takes longer than you think and however much you try to mitigate the confusion with a number-coded system of labelled boxes, you can’t escape the chaos, cost, or the fact that you have way more stuff, dirt and detritus than you thought.
Sharing micro-space with three teenagers was not a lifestyle choice of ours so much as a response to circumstance and the need for a better, more sustainable model of shelter.
You see, we are what’s called Generation Rent – professional, working people in their ‘30s, early ‘40s, who, even a decade ago, might have expected to own a house, but find themselves disenfranchised from the Kiwi dream and trapped in a rental rat race.
Tone-deaf market analysis
In property speak, Hawke’s Bay has an ‘excellent’ or ‘attractive’ housing market, still ‘very much affordable’ to most of the country. Hawke’s Bay’s median house price was $145k three years ago; it now sits at $435k – in comparison to $577k nationally – Hastings at $470k; Napier $495k.
In June this year, HB Today reported that Napier and Hastings have experienced “strong” house price inflation, having increased 68% over the last five years, with 10% and 11.9% rises in value over the last 12 months respectively.
But such descriptions, viewed through the narrow lens of capital gains, blithely disregard the reality of many who live here on provincial incomes, for whom the current housing market is neither attractive nor affordable, but catastrophic.
Not only is it increasingly difficult for first-home buyers to purchase a house, the number of rental properties in Hawke’s Bay are a third of what they were three years ago, and prices have been jumping 9.4%, 14.8%, 12.5% year on year. The median rental price (across all forms of housing) in HB is now $450 per week, about half the median HB weekly income.
I crunched the Trade Me listings for a three-bedroom (BR) rental home in April and came up with an average of $595pw for Hastings (slightly skewed by two astronomical properties); $530pw for Napier.
Harcourts property manager James Moran is not at all surprised: “If you have a decent property, you can definitely ask for those sort of premiums.” He says, with the current shortage of rental properties and (in a quick-moving market) a demand “we can’t keep up with” from renters, “It is pretty dire out there at the moment, that’s for sure.”
One pressure is the noticeable increase in people from outside the region coming to Hawke’s Bay, buying and applying for houses. And if you’re from Wellington or Auckland, $400, $500pw for a 3BR house is going to seem like a bit of a bargain, explains Moran. “They’re not so shocked at the prices.” Which pushes them up even more.
“If we advertise at an increased rate and then still get good applicants, then it does normalise the price, it becomes the going rate … It’s a stepping-up process that’s happening.”
With no sign of slowing down.
Why the rental stock shortage? Other than the obvious (not enough housing supply, full-stop), the chief factor, Moran believes, has been landlords cashing in on a good sales market, along with the fact that there’s just not as many investors buying lower-end properties to rent at the prices new home-seekers are willing to pay.
In anticipation of new rental legislation, investors have tended to be more picky, buying better properties so they don’t have to spend the money and effort to get them up to standard. That means fewer cheap-but-crappy options.
For those that have to upgrade, Moran says Harcourts “hasn’t seen huge kick-back” against the insulation and Healthy Homes standards. “Once educated about the benefits,” landlords who want to be landlords are generally willing; they’re not exiting because of compliance. And yes, they’re passing on the costs.
A desperate shortage in houses
I head down to an open home viewing for an ordinary 3BR rental on Collinge Rd, $450pw. The house, on a sunny, big back section, is compact, the bedrooms small, but it’s been freshly painted, fully insulated to 2021 standards, the fire is compliant. It’s midday, Thursday, the first time the house has been shown. It was only listed on Monday, but already the property manager says she’s received 40 applications.
It’s a common story.
Private landlords I speak to describe receiving emails and texts for weeks, desperate people crying on the phone, offers to pay more than the advertised rent. For some the experience of having to turn people away made them feel so “terrible” and overwhelmed it’s enough to put them off letting altogether.
But for seasoned property managers, like James Moran, who deal with this day in, day out, they have “robust” procedures that allow them a degree of distance in matching people with houses. It’s not that they don’t care, but they’re tasked with finding the right tenants for their clients, not finding homes for everyone, and in this market, the clients have an upper hand.
Moran is seeing more alternative applications – families applying to rent larger houses with other families to reduce the overall cost, for example. “But then that impacts on the selection process.” If the owner has a choice, they’re likely to go with the “less wear and tear” option: one couple or one family as opposed to two.
And of course, “We get a lot of the same faces coming through each and every property, you recognise them almost on a first-name basis.”
The unspoken given – that of any number of applicants there will be the cream of suitable tenants scooped up into a shortlist and a whole swathe of those sucked out on a rip-tide of forms and viewings, with no chance of making it ashore.
While media tends to focus on both ends of the spectrum (splendid capital appreciation one day, the homeless the next), the housing crisis affects everyone. Not only because there’s a lack of decent housing options in a burgeoning intermediate market, but also because since the 1970s (and most markedly in the years under John Key) we have divested our social responsibility to house the vulnerable and needy.
In May, Hawke’s Bay councils asked the Government to step in over Hawke’s Bay’s housing crisis. Hastings alone is short some 400 houses, with close to 1,000 people living in emergency accommodation in HB (440 of them children), some for up to two years. People are living in cars, overcrowded houses and on the streets. “Not a day goes by when I’m not addressing housing for our community in some form,” declared mayor Sandra Hazlehurst. “It’s a very, very big issue for us as a region.”
Hoops and privacy
Applying to rent is an interview process. At viewings, first impressions count, as does enthusiasm, the kinds of questions you ask. Good references are important, your rental history; you’ll need to supply proof of income, at the last hurdle get a credit check. You will be Google searched, your social media profiles may be scrolled.
Disturbingly, some agents (not Harcourts, assures James Moran) also request prospective tenants give consent for police checks, full employment details (occupation, position, length of employment, etc, or case manager if at WINZ), driver’s licence, how long you’ve had your cellphone number, owned your phone. In fact, you’ll often see directives like this in rental listings: ‘Viewing will ONLY be after we receive your application form, and ONLY if you meet our owner’s criteria.’
New government guidelines say ‘vetting to view’ is a no-no (it’s discriminatory), and such intrusive levels of personal information gathering (contravening the Human Rights Act and privacy laws) is “almost never justified” to determine tenant suitability. But from what I’ve seen, it’s still common practice.
Just to secure consideration for a tenancy that may or may not happen, people are uploading private information online through various application portals to unknown, usually nameless ‘landlords’, ‘owners’, ‘property managers’ – who, may I stress, are neither vetted themselves nor accountable to any legal standards.
Higher-end properties appear to have less hoops to jump through; the vetting process is swift and can happen per phone – ‘What’s your annual income bracket?’
‘Keeping’ families together
Josh*, who works in hospitality, was one of those in the under-tow, unable to surface for tenancy consideration. Following a relationship break-up, he searched for a home for himself and his young son, an experience he describes as infuriating and incredibly stressful – “It bleeds into every aspect of your life”.
It was not just the dearth of suitable, affordable places. As a single young man on a relatively low income and without shiny references, he says he didn’t stand a chance, and with a child in tow no one appeared willing to take him on as a flatmate or boarder. After five months he gave up and decided to take another crack at the relationship. “I have no other option,” he says.
Josh jokes that “the housing shortage is helping keep poor people together”, and while it may yet prove a happy outcome in his case, for many it means they are stuck in unhealthy, potentially violent, living arrangements.
Moving back home
Young men (along with solo mums and Māori) have the toughest job finding rentals.
Sam* runs his own construction company, employs people, but he’s living back at home with his folks since his lease expired around Christmas. He was house-sharing with another young, professional dad in a comfortable suburb; a house scored on a ‘mate’s-in’. “It’s all about who you know,” he says, and he knew the property manager.
They cleared up the back garden, dug a vegetable patch, put up a pool for the kids, but didn’t think to manicure the small front lawn. A neighbour complained to the landlord that it was devaluing her property, who gave them the first of multiple warnings – “It was like they’d decided we weren’t right for their neighbourhood image and they were going to give us hell.” When the lease ended and the house put on the market, Sam’s flatmate bought a house; Sam couldn’t afford to, and finding another rental proved “virtually impossible”.
Jen* and Bruno* have been successful in terms of what they’re contributing to society as self-employed creatives, but “Neither of us is prepared to go into a massive, massive mortgage with a minimal deposit, paying huge amounts of interest,” says Jen. “You need an inheritance or a wealthy relation to get onto the rungs of the property ladder, how else do you get $100k or more together?”
They tried building themselves a container home next to Bruno’s workshop, but zoning restrictions, consent complications and “a lack of willingness to think outside the box” by bureaucrats, meant they had to give it up and sell it on.
Instead they’ve been consigned to moving multiple times in the past few years with their school-age child.
In Napier wanted their rental home back two years ago, they found a place across the other side of the Bay they could afford and relocated. “
But when we went to renew after our 6-month lease ended, the landlord said she needed to put up the rent to market value, and increased our rent by 30%. She wasn’t entirely honest with us when we first took on the house.”
They stayed on another year before moving to the coast in “a very sweet but tiny 2BR house”, paying $390pw. They hope to be there longer, but they’re on a 12-month lease, after which they’ll go onto a periodic tenancy (per landlord’s wishes and rental norms), meaning tenancy can be terminated at any time with 90 days’ notice.
“We’re treading water, wondering if there’ll be a big wave or not. We’re just waiting for the market crash,” she jokes.
Living on a knife-edge
Helen* has postgraduate qualification and contract-works in communications. Being self-employed, there’s no paid holiday or sick leave. She pays ACC and taxes, but she can’t afford to pay into Kiwisaver, let alone save for a house deposit – “There’s just nothing spare.” There’s no certainty of ongoing work, no assurance of tenancy (they have no fixed or long-term arrangement). “We’re always on a knife-edge,” she says.
Since moving from the UK with her Kiwi partner to Hawke’s Bay seven years ago, they’ve re-located seven times. She doesn’t feel landlords have a lot of respect for tenants.
She tells of caring for two small children five years ago in a “cold, damp box” with no source of heating (not a legal requirement until this year), struggling with postnatal depression, massive power bills and a sense of isolation. In another property she was served 42-days’ notice when her newborn was barely three weeks-old, just three months after moving in – the owner was selling up. “The property manager withheld that information when she rented it out to us, although it was obvious I was expecting a baby.”
They’re now in a place that’s “ok” (it’s warm at least and the rent, which increased after the heat pump was installed, is still manageable – just).
“We feel we’re good tenants. We look after the garden – which was completely overgrown when we moved in – undertake minor repairs to the house. But in the end, you can’t forget that you’re just living in someone else’s investment property.”
She often questions whether they could have done something differently. “But even if I’d got a full-time job and put the kids in childcare, it wouldn’t have changed the situation as a renter. I might have been able to afford a more expensive rental, but I still wouldn’t have been able to save for a house deposit. The precariousness wouldn’t have changed.”
She’s resigned herself to their living situation: “There’s no solution, but we do talk about it a lot.” And a house move will be inevitable, “it’s just a matter of time before we’re served notice or the cost becomes untenable.”
(*Not their real names)
My husband comes from Berlin, where 90% of the population rents. It’s a city designed for tenants, the rentals managed mainly by longstanding housing corporations and cooperatives.
We have friends who have lived in the same apartments for 20, 30 years. They’ve stripped and sanded back floors, put in new heating systems, made renovations, because you can make those investments when you know it’s your home for the long-term.
Tenants have strong rights, but also obligations – you must re-paint the interior every 3-5 years, for example, upon handing it back, walls must be freshly painted white.
Like most global cities, Berlin’s affordability has been impacted by Airbnb, gentrification and international property speculation. But the principle remains: there’s no shame in renting, it’s a completely accepted norm, and you can live well without owning the four walls around you.
In New Zealand, however, our rental system was created for students and itinerants, for a transient phase of life. The assumption was that settling down with a family, a job, came with a house of your own and a mortgage. If you don’t achieve the house, there’s social stigma – you haven’t worked hard enough, you’ve been less than successful (which is why no one who shared their stories in BayBuzz wished to be identified).
And in terms of access to quality, security and dignity of living, as a renter you know you are second-class.
Yet 2018 saw the lowest rate of home ownership in 66 years. The majority of young Kiwis now rent for the long-term, raising families in a system that’s under-regulated and not set up for stable, secure tenancy. Amongst those under 40 years of age, only 22% owned their own homes in the 2013 census, down from 35% in 2001. The NZ Herald kindly points out: if you don’t own a home by 40, you probably never will.
According to The Big Idea, median income in NZ is $51,900 for all New Zealanders earning a wage/salary. For the self-employed it’s $37,900. For those working in the creative industries, that slides on a scale right down to $17,000.
We don’t have a mature philanthropic culture in NZ of investing in the arts, creative or social initiatives; there’s not much support for small-medium enterprises, for all our talk of entrepreneurship and DIYers.
Investment is funnelled primarily into property. And while house values (and rents) rise, those hustling a livelihood in the gig economy are working harder, longer, just to keep up with rising living costs.
Seeds of discontent
There’s a meme circulating in social media, a millennial joke: When our parents told us they would give us something to cry about, we didn’t realise they meant they’d wreck the housing market and trash the planet.
Perhaps it’s too simplistic to blame Baby Boomers & Co for feathering their own nests at the expense of younger generations, but there are certainly seeds for discontent and an intergenerational rift, as articles show on millennial-dominant media platforms like The Spinoff (e.g., ‘Five key triumphs in Boomers’ blessed lives’).
As wealth and prospects decline for those aged 18-35 (a trajectory set only to sharpen with the climate crisis), wealth for the 65+ cohort increased by 25% from 2004-2014, two-thirds of which was based on private property gains (none of which is taxed).
“As a nation, we have collectively stood by for decades and let housing – whether an affordable first home or a decent rental – become a privilege, not a right,” observe economists Shamubeel and Selena Eaquab in their book Generation Rent (2015).
They warn that housing unaffordability means ultimately, “only those with an existing stake in the housing market, either through their past investments or through their parents, will own homes,” dividing NZ into two classes: “the landed gentry and the rest”.
When the Government declared it wouldn’t be introducing a capital gains tax – ever, as hard-working, tax-paying renters who had just been served notice, we took it personally.
We decided to stop feeding the beast and to shapeshift our way out of the current housing paradigm altogether. We would live in a cave if we had to. We would build an ark.
By building an off-grid, mobile tiny house – launching the build on our driveway like an emergency raft – we are claiming the autonomy to create, and keep, a home on our terms, while exploring what it might mean to live within the limits of the planet. It’s less about fences, we’re finding, more about sharing resources.
Opportunities for change
The Government has brought in some reforms to the rental system, namely improved standards to housing (insulation, heating) with hefty fines for non-compliance, longer terms of notice, banning letting fees, and has promised to look into regulating landlords. However, it doesn’t go far or deep enough to make renting a viable, long-term option. The levers of change are far more complex and wide-reaching, our cultural myths entrenched.
Raising rental standards has been decried as a “crackdown on mum-and-dad landlords” by National, which also claims the Government’s recently announced intention to explore large-scale, high-quality, build-to-rent commercial partnerships as part of its Kiwibuild scheme reset is “unfair” to individual investors. But investment returns cannot justify substandard living conditions nor the withholding of relief to those struggling to find suitable, dignified accommodation.
We can’t rely on ‘mum-and-dad investors’ or a freewheeling market to uphold all our rental needs – that clearly hasn’t worked. And while there will always be a place for well-prepared, individual private landlords, we need a mix of other housing options.
Te Tai Whenua Trust, in collaboration with Hastings District Council, has begun construction of a cooperative, co-housing papakainga project in Flaxmere, waingakau.co.nz – a mix of social housing, rent-to-buy homes and private ownership with shared community spaces. The first of its kind in NZ on this scale, and it’s exactly the kind of vision we need.
We need our councils to be bolder, more imaginative in how they define living options for the wider community. Although HDC has also opened up the zoning of its CBD for inner-city living, we’re still stuck very much in a nuclear-family-home paradigm.
It’s still much easier to build a mega, single-storey, carbon-heavy house with double garage on one title than to get consent for alternatives, such as three small, climate-conscious dwellings in a shared arrangement – bylaws preclude multiple dwellings on one site, including off-grid tiny homes on wheels. And it’s expensive to build multi-storey apartments. That’s why we’ve got a growing sprawl of ‘premium’ Monopoly houses, chewing up fertile, productive land.
We need local councils, and the Government, to recognise the rental crisis and to face up to the need for radical adaptation, to support, not stymie, innovation in how we home ourselves.