Leonie Freeman is Managing Director of the Property Council, which connects over 10,000 property professionals and 550 member companies.
OPINION: If we all closed our eyes and imagined a well-functioning rental market, most people would imagine that it would have an abundant supply of good quality housing. It would be a market where people could rent at a reasonable and stable price. Tenants would have the choice and the ability to stay in their home long term.
New Zealand have really failed. The rental market in this country is not viable. Rents are rising as the growing shortage of properties puts pressure on the market. The properties available are often unsanitary and of poor quality.
Renting is an important part of life in New Zealand. For many Kiwis, of all ages and walks of life, renting is how they put a roof over their heads. Renters should be able to make their house a home, but I keep hearing stories that our rental market is failing to offer renters.
Tired of renting, this Auckland couple pooled their resources and built themselves a tiny home from the ground up – with lots of help from friends, family, strangers and Youtube. (Video first screened in October 2020.)
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Something clearly has to change. We urgently need more and better rental housing. Every organization with an interest in housing, from government to the private sector, must take ownership of the problem and commit to finding practical solutions.
As CEO of Property Council, I am proud to help represent the private sector – and collectively we have a viable solution for the rental market, which is ready for implementation today: Build to Rent.
Build to Rent (BTR) is one of the fastest growing sources of new housing overseas and has the potential to transform the New Zealand rental market with tens of thousands of quality new homes.
Unlike a classic real estate development, BTR houses are designed and built specifically for long-term rental. BTR properties are owned and maintained by specialist operators, where tenants are treated as valued customers, not money-making machines.
BTR developments typically offer long-term certainty of occupancy, providing potential tenants with the stability of living in their home. In other countries, it is common for BTR leases to be for three years or more, with investors wanting a longer stay – but, importantly, tenants can leave the rental much earlier if they wish .
Flexibility, quality and certainty – a combination of these factors would make a tangible difference to the rental experience in New Zealand.
Additionally, overseas BTR residents enjoy the benefit of living in purpose-built accommodation with a range of high-quality amenities and stable, sustainably priced rents.
BTR is an overseas powerhouse, with Australia seeing a BTR property boom of almost 16,000 homes by the end of 2021.
New Zealand has fallen behind the BTR curve, and unenforceable legislation and ongoing investment restrictions are squarely to blame. Our members estimate that they could provide 6,100 BTR homes within two years, rising to 25,000 built within 10 years if the right policy decisions are implemented quickly. New Zealand has a few small BTR projects underway, but the industry is hampered by unnecessary red tape.
Property Council has been working with the government for a year to illustrate the benefits of BTR and highlight the very real difficulties faced by Kiwi tenants. We are also hosting an industry conference, the Residential Development Summit, to raise awareness about BTR and educate stakeholders on the benefits of BTR and the steps needed to make it successful in New Zealand. For BTR to truly thrive and tenants to have stability, it is important that the government act urgently to define BTR as an asset class.
We hope that the government will recognize the transformative potential of this emerging asset class; one that costs the Crown nothing.
BTR is one of the obvious missing pieces of the New Zealand housing puzzle. It could be quickly triggered by the private sector and would provide thousands of new, warm, dry rental units to a housing market in desperate need of change.
This would have a massive impact on the trajectory of our rental market. More supply means less pressure on rental rates and more choice for Kiwi renters. It will also improve the lives of the most vulnerable people in our society, reducing waiting lists for social housing which are currently stretched to breaking point.
All tenants deserve to be able to rent a good quality home, with stable rents and reasonable certainty of occupancy. BTR can help you achieve this.
A small legislative change, at no cost to the taxpayer, could help tens of thousands of Kiwis find stable housing. It is the government’s responsibility to accelerate change.