Analysis: Like so many New Zealanders, Matt Heal knows the insecurity of renting. He and his family were given notice on their rented Auckland home a week before Christmas, just as they were enrolling their young daughter to start school a few years ago.
“We were desperately trying to find a new house just as my daughter was about to start primary school. There were only four houses of a suitable size in our suburb for rent. We found that highly destabilising.”
Now, Heal is in charge of build-to-rent housing for New Ground Capital, which has partnered with the NZ Super Fund, Ngāi Tahu and other iwi to develop new housing and apartments at Hobsonville and Whenuapai. On Friday, he showed Housing Minister Megan Woods around one of their developments, Kerepeti, where 47 of the 208 homes are leased out as long term rental units.
That security of tenure isn’t an especially big deal for property investors, he tells me. In Auckland, especially, if one renter leaves there’s always another waiting at the door. But it is a big deal to tenants – ever since the sell-off of much of NZ’s state and council housing, they have struggled to put down roots in a community. Any day, the landlord could give them notice.
The average renter in NZ moves about every 16 months, Heal said. “So you’ve got this huge cost, you’ve got this huge dislocation. You’ve got the social upheaval if your kids have to move school, you’ve got additional complexities around timing and trying to stay in communities – it’s highly disruptive.”
Security of tenure is important to social wellbeing, to the economy and to the Government, too – so last year, it made changes to the Residential Tenancies Act to provide more protection.
Woods is taking that further: she has announced new tax incentives for build-to-rent housing – contingent on the developers offering their tenants good terms and tenure. Last year the Government offered 20 years of interest deductibility for new-build homes; now Woods has announced interest limitation rules in perpetuity, for landlords offering 10-year tenancies.
“Build-to-rent can help to continue the current momentum of new supply and improve the quality of rental housing with new warm, dry, secure homes,” she said. “We believe security of tenure is critical for people who are renting. This requirement will enable people to settle and personalise their homes, reduce how often they must find a new place to live and all those associated moving costs, especially as people face cost of living challenges, and help them to build and maintain connection to their community.”
So what might that look like? Well, at Kerepeti, tenants are given freedom to alter their home and garden, and to keep pets. There’s a woman in her 60s on a seven-year lease, who has fully landscaped her garden, added a wallpaper feature wall, and put her own curtains into the house she shares with her 14-year-old dog. And it’s not just cats and dogs and goldfish. In one rented apartment, Heal said there’s a 7-year old boy with a bearded dragon.
The move has been welcomed by the Property Council.
“Today’s announcement is one of the best levers to unlocking the potential of build to rent,” said chief executive Leonie Freeman, “in order to provide warm, dry rental homes that offer Kiwis long-term security of tenure.”
It’s important to understand that providing secure rentals is not only the role of social housing; recognising renting as an important part of the housing market is somewhere that NZ has lagged. Heal said Kerepeti, for instance, was a wholly commercial development offering properties in the top rental quartile.
“There’s a huge number of people, especially in Auckland, that rent either through necessity or through choice,” Heal said. “That part of the market hasn’t been well catered for, and has traditionally just been serviced by mum-and-dad landlords or small unprofessional landlords. And we think, given the size of the housing market, there is a massive opportunity for a much better offer.”