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(Photo: Getty Images)
(Photo: Getty Images)

BusinessDecember 9, 2020

New report shows the truly dire state of NZ housing

(Photo: Getty Images)
(Photo: Getty Images)

Stats NZ released a report yesterday that provides the most comprehensive view to date on housing in New Zealand. The findings are not pretty.

It’s no surprise to anyone to hear that New Zealand’s housing is beset by great many problems. But it’s quite different to see the extent of the crisis laid out and quantified in a 150-page report.

Released yesterday by Stats NZ, Housing in Aotearoa: 2020 gives a thorough overview of housing across the country by pulling data from the 2018 census, 2020 quarterly employment survey, the 2019 economic survey and social and pilot housing surveys from the past two years.

The report is broken down into seven parts, each looking at housing from different angles: affordability, habitability, supply and demand, rentals, stock, use and the environmental impact. All in all, it tells a stirring tale of how interwoven our lives and societies are with the homes we live in, and how the current woes are directly linked to the burgeoning inequality and diminishing quality of life of many New Zealanders.

What are the key findings?

Probably the biggest finding from the report confirms what many of us already suspected – the rate of homeownership has fallen.

According to the data, the proportion of households that own the house they live in dropped to 64.5% in 2018 – the lowest rate since 1951 – with younger people disproportionately affected. Since 1990, the rate of home owners in their late 20s plummeted from 61% to 44% and those in their late 30s from 79% to 59%. Surprisingly, things have been relatively stable over the past decade, and the biggest declines occurred during the 1990s, when unemployment was at its highest level since the great depression.

The data was even more skewed when viewed across ethnicities. While every ethnicity experienced a decline in home ownership, Māori and Pasifka households saw the most severe drop and were more likely to live in damp and unhealthy, or overcrowded homes.

While the decline occurred in every region in New Zealand, it was more severe in cities, with the largest drop occurring in Auckland.

What about rentals and housing affordability?

Naturally, with the rate of homeownership declining, the proportion of those who rent has increased. One third of New Zealand households – 1.4 million people – rented the home they lived in 2018.

Again, it’s no shock to read that the cost of housing is rising. Perhaps the most disconcerting finding, however, was that the amount of households putting aside 30% of their weekly income to rent increased from 20% of renters in 1988, to 40% in 2019.

Although house prices have been rising at a faster rate than wages over the past five years, owner-occupiers have been having a much better time of it because of low interest rates. According to the report, the low cost of borrowing means mortgage interest payments are estimated to be similar in 2020 to those in 2010, despite the increase in median house prices over that period.

While higher house prices generated wealth for homeowners, they have naturally made it harder for aspiring homeowners to get onto the property ladder.

How damp, cold and crowded are our houses?

Very. According to the 2018 census data, which thoroughly questioned New Zealanders on the quality of their homes, around one in five homes were damp sometimes, and one in five New Zealanders lived in a home that was always or often too cold in winter, but this rose to around two in five Pasifika and Māori.

Often the people living in these damp, cold and mouldy houses suffered more frequently from cold, flu and asthma, had poor mental wellbeing, and rated their overall life satisfaction poorly.

These problems were more common in rentals or crowded houses than those that were owner occupied, which were more likely to have efficient heating like heat pumps and wood burners.

On a more positive note, the 2018 Pilot Housing Survey, from which the report pulled its data, showed improvements in insulation and more efficient forms of heating among new dwellings.

In terms of crowdedness, around one in nine New Zealanders lived in a crowded house in 2018, with the highest rates of crowding among Pasifika people.

Crowding was highest in the Auckland and Gisborne regions; within Auckland, one in four households in Mangere-Otahuhu and Otara-Papatoetoe were crowded.

What about the relationship between housing and the environment?

Due to the monumental amount of natural resources involved in housing construction and use, housing has a considerable influence on greenhouse gases and the environment.

The New Zealand construction sector represented about 16% of total greenhouse gas emissions in 2018. Because new houses are typically larger than older ones – a third of houses now have four or more bedrooms compared with one-fifth in 1991 – land use, and therefore the carbon footprint, increases. The poor quality of many old houses meant that occupants were having to use a great deal more energy to heat or maintain them.

And what does the report have to say about housing supply and demand?

The report found that around one-third of New Zealand’s homes have been built in the last 20 years. However, supply is still not keeping up with demand or New Zealand’s population growth, and still lags behind the 1970s in relation to new dwelling consents per head of population.

While houses are becoming larger, the report noted an increase in the diversification of housing stock, with more multi-unit dwellings being built. Around 40% of all new dwellings consented since mid-2019 were multi-unit.

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(Photo: Getty Images)
(Photo: Getty Images)

OPINIONBusinessDecember 8, 2020

An open letter to Jacinda Ardern from a desperate small business owner

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(Photo: Getty Images)

With nowhere else to turn, a small business owner issues a plea to the prime minister to level the playing field between tenant and landlord.

Dear Ms Ardern,

First of all, I would like to congratulate you on your re-election, and your second term in government. I hope it will be a successful three years that allows you to create meaningful change and address the critical issues in our society.

I am the owner of a (now shuttered) small business in Auckland’s CBD. For legal reasons, I have to remain anonymous. I am writing to you now to ask for help. I am desperate, and have nowhere left to turn.

Covid-19 and two lockdowns this year have stripped me of my main livelihood and my mental wellbeing, and put me in a perilous position. Forced out of my business, I am now working in a supermarket, with most of my weekly income going towards a legal battle with my landlord to avoid losing everything I have.

Many businesses have faced hard times during this extraordinary year. There have been massive changes that have forced business owners to close down their beloved operations and walk away. Of course, this kind of thing happens all the time. It’s a normal part of the business ecosystem.

But nothing about this year has been normal. And for me, walking away is not so simple.

Due to the way my lease has been written, and the tremendous power it gives my landlord, liquidating my business and terminating my lease means losing my house, my assets and going bankrupt.

Because I have been unable to pay my full rent for the past six months – due to the lockdowns and low foot traffic caused by construction in the CBD ­– my landlord has locked me out of my business and is launching legal action to come after me for everything they can get.

It all comes down to the personal guarantee clause in my lease, which says if I don’t or can’t meet my obligations, the landlord can take legal action to recoup the value of unpaid rent for the remainder of the lease term – in my case two years.

This is a common clause installed in commercial leases to protect landlords from making a loss due to an unreliable tenant. However, there’s nothing in this clause that allows for the uncontrollable, untenable, once-in-a-century impact of a global pandemic and nationwide lockdown.

Because of what I’ve had to do this year to keep my business afloat, I’m backed into a corner with few credit options available to help me. After the first lockdown, I borrowed $50,000 from the bank to continue paying my debts and staff. Like many others, I also applied for a mortgage holiday under hardship to create breathing space. It seemed like business was starting to improve, and customers were beginning to return. But then Auckland was put into a second lockdown and everything fell apart again.

Now, because of those actions I took, with my business closed and my main income stream gone, there’s no way the bank will loan me any more money to help me pay my debts. I’ve been forced to take a $50,000 second-tier, six-month loan at 15% interest, but it won’t be enough for the landlord to let me walk away.

For the past six months, amid constant lawyer threats and eviction notices, I’ve tried everything in my power to reason and negotiate with the landlord. I’ve tried to come up with a payment plan. I’ve tried to offer rent deferrals. I’ve tried mediation services. Everything has failed.

And it’s not just me. Several of my neighbouring businesses are in a similar position. Some of these people are migrants who have owned their businesses for over 10 years. They don’t want to go bankrupt. Nobody wants to go bankrupt.

So we are asking for your help. But this isn’t just about money or subsidies. This is about doing what’s right and fair, levelling the playing field between tenant and landlord, and putting the small reforms in place that reflect the extenuating circumstances of a global pandemic, and the devastating effect it has had on small businesses in New Zealand.

Earlier this year, a number of small business owners provided input on what was needed to avoid a wave of unjustified bankruptcies and business closures. Your government took this advice on board and attempted to make amendments to the Property Law Act so it would reflect the challenges of the pandemic, and require commercial tenants and their landlords to work together to find a solution and share the financial burden of this crisis – similar to the mandatory code of conduct the Australian government has implemented to protect business owners from serious hardship.

These amendments were blocked by NZ First, and the only help that was made available was an extension on lease termination notice periods and a voluntary mediation subsidy – a useless tool in our case because our landlord does not want to mediate.

Now that NZ First is no longer in your government, we are asking you to urgently review and implement those initial amendments to the Property Law Act as Australia has done – requiring the financial burden of this crisis to be shared equally between tenants and landlords. At the very least, it should place a limit on personal guarantees so that a landlord cannot sue a small business owner for the full term of their lease.

This will give us breathing space, allowing us to pay our landlords a reasonable amount that reflects the challenges of the pandemic. It will allow me to extract myself from this agonising situation without losing my house, which I bought with my life savings after living in my car for months.

We have written this request to minister for small business Stuart Nash, who has said it is up to landlords to voluntarily work with their tenants constructively to find a solution. But we have tried going down this road, and it’s clear some landlords aren’t interested or willing to come to the table – possibly because they themselves are under pressure from their bank.

The power is therefore in your hands to make this happen and ensure the “team of five million” idea isn’t just a PR soundbite. Throughout your term in government, you have constantly affirmed the principles of kindness and compassion, especially towards those who are struggling or at risk. We ask you now to channel that kindness and compassion, to lead with strength and integrity, and implement those reforms. If a country like Australia can do it, we can do it too.

This year has thrown us into a crisis that none of us ever expected or planned for. It has caused unfathomable mental and physical stress, and pushed many of us – once proud and happy business owners – closer towards the edge of poverty.

After the election you said your party would govern for every New Zealander. If you really meant that promise, then please, govern for us.

Yours sincerely,

A desperate small business owner