The housing crisis hits – again

As the academic year starts for tens of thousands of university students, the frenzy of looking for accommodation begins again.

This time however, it’s worse than any year before. There is a shortage of rentals. Trade Me reported a drop in availability of 70% in December 2017. Landlords are milking this woeful supply situation by increasing rent. In the past few months, rents have gone up in Wellington by an average of around $30 per week. And there’s predictions that rent will rise further once the academic year starts.

It’s hard for everyone. Spare a thought for solo mothers looking for places with their children, and Māori and Pasifika students facing landlords’ racism and discrimination as they search for flats.

Since January 2018, Finance Minister Grant Robertson has had a flood of complaints from students complaining about their landlord who have gobbled up the $50 increase of the accommodation supplement with a hike in rent.

The median rent is $460 per week nationally, with Auckland copping the worst of it with a median of $530.

For many, the search for a place to stay begins as soon as the summer break begins, lasting weeks.

This can mean weeks of viewing exorbitantly priced dilapidated dwellings. Reports are trickling in of landlords asking for a “maximum price” that tenants are willing to pay, encouraging a price war amongst tenants.

“Lisa” told the Spinoff of her experience of flat hunting where landlords were encouraging a bidding war when she went to look at a place in Hataitai, Wellington:

“We went to a nice house where there were a lot of people obviously in a similar position to us … As we walked in to register there was a spreadsheet where you could put your name and phone number, and then I saw a column where you could list your maximum rent that you were willing to pay.”

This practise of encouraging a bidding war is perfectly legal according to Steve Watson, of Ministry of Business and Innovation and Employment.

Landlords call themselves “property investors”. A more accurate name for these exploiters is “parasites”.

Solutions around short supply and the quality of rentals

Economist and co-author of Generation Rent Shamubeel Eaqub noted that landlords can get away with the spike in rent because of the lack of housing. He connected two trends as to why there was a short supply. The first was because of the overheated housing market, more people were renting longer to save for their first home.

And the second was that there was “insufficient supply of state and social housing, which is adding to demand for more private rental”. Indeed, Minister of Housing Phil Twyford stated that the number of people waiting for a state home had reached 7,725 in December 2017.

So, one of the obvious solutions then to the overheated rental market is to increase state and council housing. Despite this obvious solution, the previous National government attempted to devolve their responsibilities around this fundamental provision. Indeed there are 6000 fewer state houses just in the past four years.

Another obvious solution would be to increase renters’ rights. In Generation Rent Eaqub wrote that “New Zealand has one of the weakest tenant protection system in the world”. In countries where renters have more protections, tenants can have long term leases of up to seven years. This gives stability and comfort for tenants rather than the prospect of having to move every year.

In this respect, there needs to be some form of warrant of fitness that meets a minimum standard.

The quality and length of tenure were recommendations given by MBIE itself. So dire is the situation for renters that in 2017 MBIE assessed a need to set up a body to investigate landlords who breach the Residential Tenancy Act. Within three months of their existence, they had successfully investigated a situation where a landlord was fined $17,000 for renting his garage to a young family. This is only the tip of the iceberg. And it doesn’t address the need of supply. The Tenancy Tribunal were only alerted to this case because the family had been evicted from the garage and they had nowhere else to go. There are thousands of renters in the same situation where they cannot speak out against illegal slum landlords because they don’t have anywhere else to go.

Landlords are not the solution

One thing is for sure – appealing to landlords to have a heart or to up their game is not a solution. It is not simply a case of there being “bad” or “amateur” landlords. All rentals are fundamentally about profit for landlords. So is it any wonder that landlords try to cut corners, and act illegally so that they can maintain their rent levels?

After all, perfectly legal and acceptable rents are themselves a form of exploitation – landlords profit from renting out properties. They make more money from the workers staying in their properties than they spend on maintaining those properties. Rent, like the wage system, is capitalist inequality at work.

So it’s no surprise that giving money away to landlords has proved to be fruitless, as EECA chief executive Andrew Casey laments. Despite a government scheme introduced in 2009 granting upwards of half the insulation costs for rentals, the uptake of this scheme has been glacially slow. To be precise, of the 20,000 rentals the government hoped to have insulated within the past nine years, only 3700 properties have used the subsidy.

More recently the voluntary WOF for rentals that Wellington City Council introduced was met with derision by landlords and property managers. Despite the measly cost of $250 (about half a week’ worth of rent) for the WOF, the Council was met with howls of outrage. Stuff reported that in the first six weeks since the launch, just two properties had opted to undertake this scheme.

Property manager Richard Horne bluntly explained the disincentive for landlords in a Stuff interview. “Nobody has gotten in touch with us and said we must do this.” He went on to say that because it was voluntary there was little incentive for landlords to comply. “It’s optional, so why would you opt to spend $250 when, theoretically at the moment there is no market difference in having a warrant or not”.

Landlords are not even prepared to pay $250 for a scheme that ensures some minimum standard of their rental. This layer of people are not the solution to solving damp, mouldy, substandard rentals. It’s obvious that giving money or options for landlords will only be met with derision and inaction. They need to be forced into solutions that will improve the lot for tenants.

The limits of increasing supply

The fact is that issues around supply, exorbitant rents, and the quality of rentals will always be an issue so long this fundamental human right is left in the hands of the market. Historically, securing a state house has never been easy and demand has nearly always outstripped supply.

In 1945 Mrs Greenstreet penned this petition to Walter Nash, Minister of Finance in the first Labour government, stating:

“I have received a doctor’s certificate advising me to make every effort to obtain more adequate accommodation as my husband and I share a bedroom with two children, which is definitely detrimental to both their health and mine”

This was 1944 and her situation could easily apply to thousands of renters today.

Moreover, just because you are able to secure a state house it still means paying rent. While the rent isn’t market rates, it’s still a toll for low-income families. Mary and David McGregor, the family who received all the pomp and circumstance for being the first family to live in a state house in Miramar, Wellington, still needed to pay one-third of their income in rent.

The situation is even more dire now. The same house is now in the hands of private landlords. In the 60th anniversary of the state house, the family who were living there then were paying three-quarters of their income in rent.

Housing with a focus on human need

Even with an increase to state and social housing however, it’s not going to do away with the fundamental inequity of rent. As long as there is a focus on housing being a form of investment, rather than human need, then housing will always be in crisis.

As British socialist David Renton explains the private housing and rent is a form of exploitation of the working class with the onset of the industrial revolution:

The home became primarily a place of social reproduction: where workers rested between shifts, where meals were prepared, where adults cared for the young.

The recruitment of tens of thousands of workers required the building of new houses. Workers lacked the money to buy their own homes and rented rooms instead from private landlords.

To that end, we don’t need solutions that will “make a good investment proposition for landlords” as Eaqub proposes. We need solutions that will meet the needs and desires for students, young people, the homeless or those desperately seeking housing. The only true solutions are those with human need as their focus.