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Shamubeel Eaqub: Has anything changed for Generation Rent?

Economist Shamubeel Eaqub’s ‘Generation Rent’ helped quantify the massive changes to the way New Zealanders owned and rented in 2015. Here he looks at what can be don to fix the problems that created.

The statistics are clear: fewer Kiwis are living in their own home – more Kiwis are renting. The home ownership rate has been falling since a peak in the early 1990s and is now at the lowest level since 1946 (using my estimates to update 2013 Census data). There has been no improvement in making houses more affordable. There has been no tangible improvement in renting. In places like Auckland, the average rent is over a quarter of gross income of an average family.  

Renting has not traditionally been part of the Kiwi dream; it has always seemed like a second-class option. But it doesn’t have to be that way. In other countries, people can rent for very long periods of time without any sense of inferiority. They can be just as fulfilled and happy as people who own their own home. That could be the case in New Zealand as well. While homeownership should be available to everyone who wants it, for those who don’t, renting should be as good a way of making a home. But at the moment, it isn’t. A lot of rental housing is in very poor condition, and tenants have very few rights and little security.To make a rental a home, not just shelter, there are a few things that can help. A Grattan Institute paper on Australian housing policy outlines the two key areas that help to mimic some of the benefits of home ownership in renting:

  • Security: Leases with longer and more secure tenure can help generate social benefits attributable to home ownership. Many other countries, like Switzerland, Germany and Ireland, have such settings in place. In these countries longer lease terms, more narrowly defined reasons for eviction, and longer notice periods are common. We have made no progress on this in NZ.
  • Making a home: Often this involves improvements to the house and, ability to keep a pet. Recent moves to encourage insulation is a good first step, but there has been little tangible impact to date.

 

A good example for us to follow may be Ireland. Which has recently changed their rental policies to give more tenure security to tenants. There is a give and take – more rights for tenants come with more responsibilities. There are plenty of international comparisons for us to learn from to make renting better.

The politics will eventually force the issues. At the 2013 Census, half of the New Zealand population aged over 15 lived in a rental. Soon, Generation Rent will be the majority of the population and eventually the majority of voters.


Resources:

Grattan Institute paper on renovating housing policy in Australia

NZIER report on housing affordability challenge