Rent Week 2018: Riding into office at least partly on the inability of the National government to solve – or acknowledge – the housing crisis in New Zealand, Labour now faces the titanic task of actually making something happen. Don Rowe speaks to Minister of Housing and Urban Development Phil Twyford about just how Labour plan to get the job done.
Despite what he says, Phil Twyford is a man under pressure. Minster of housing and urban development under Jacinda Ardern’s historical and adolescent coalition government, Twyford has perhaps the least enviable job in New Zealand politics – sorting out the absolute clusterfuck that is housing in this country.
Rent is too high, houses are too cold, deposits are unaffordable and the relationship between tenant and landlord is breaking further down into Mad Max tribalism with every tenancy cycle. An entire generation has been locked out of the housing market, demand continues to outpace supply, and just four months ago we had a government who refused to acknowledge the reality of a housing crisis with ramifications at every social level in New Zealand.
Housing is a core issue for Labour, ostensibly the champions of the working class. For nine years they’ve whined from opposition. Now, at the head of a three-headed beast of a government, they have a shot at proving the neoliberal experiment a mistake. The state has a role to play, Labour ideology states. Twyford is the man tasked with making that more than a platitude.
On Friday, shortly after the rain which mercifully cut through the humidity draped over Auckland ceased, Twyford spoke to a circle of housing developers and press hacks on a muddy lot in New Lynn. Formerly the site of 16 state houses over 11,000 sqm, work was to begin on a new project: 82 houses with capacity for just under 300 tenants. With double-glazing, insulation, thermal curtains, carpet and low maintenance gardens, it’s a microcosm of Labour’s plans for the state housing sector as a whole.
Islington Ave seems a nice place to live. Two doors down from the state housing development is St Thomas’ Anglican Church, its red bricks conspicuous against the grey and green of sky and trees. There’s an afterschool program here. Down the street is New Lynn School where the door says welcome in 18 languages. Across the road is a butchery, and a fruit store. This is state housing in its best sense.
It’s not all about Auckland. Up to 155 new state houses will be built across 15 regional centres by the middle of this year, Tyford says. “This is the largest building initative Housing NZ has undertaken outside the main centres in decades.”
But with well over a third of Kiwis renting, the vast majority from private landlords, what about everyone else? When you’re six weeks from eviction at any moment, how is anyone to put down roots, psychological or otherwise?
As the Jacindamania contact high on the left wears off and the nation looks for results, I put those questions to Minister Twyford.
The following conversation has been edited for continuity and clarity.
It struck me watching you walk about that you don’t seem to be particularly gutted to be in your job. Obviously the last government caught a lot of flack over housing and now you’re essentially the man in charge of fixing all of that. How do you view your responsibilities as minister of housing in light of that?
It’s a responsibility that I take very, very seriously, because I think that fixing the housing crisis is one of the great tasks for our generation. It’s such a mess and it’s so damaging socially and economically, and so unnecessary that we have to rise to the challenge and sort it out.
I’m very optimistic that we can fix it because a) previous generations in this country avoided these problems, and b) there are so many cities and countries around the world who don’t have these problems. What we have is a policy and market failure. It’s entirely created by bad policy that have had disastrous outcomes.
I’m not fussed about the short term political noise and the pressure, and all the ‘You’ve been in government four months, where are all the houses?’ I’m not fussed about that, because I know that we can fix this problem and believe me, it won’t be that long until people are going ‘Oh god, yet another announcement about a couple hundred houses’. They’ll be sick of it.
In terms of fixing the problem, the Healthy Homes Guarantee bill was passed last year, the exact requirements of which weren’t in the bill, and were supposed to be set early this year. What progress has been made on confirming those requirements, and when can tenants and landlords expect to know what the standards are going to be?
It’s a reasonably complicated thing to do, to set standards that will be effective and user friendly. That’s why they need to be in regulations and not in the primary legislation because they’re the kind of things that you want to be able to update from time to time. We’ve allowed 18 months to set the standards and make them operational. My officials have begun the process of designing the consultation process and the next month or two I expect we’ll be releasing material publicly and so on.
The approach that we’ve taken is that rental properties will have to be able to be kept warm and dry to a certain standard, for instance the optimum indoor living temperature is within a certain range that will be set in relation to the WHO standards. The standards will take into account insulation, heating – there’ll be requirements for a modern, fixed and affordable heating source, like a modern woodburner or heat pump. It will take into account weather tightness, draft stopping and drainage. All of the main things that determine whether a house is warm and dry.
Another thing that contributes to quality of life for tenants is security of tenure, an issue that I think is particularly important for our readership who are most likely in frighteningly transitory housing. In a speech in December last year you said that the Residential Tenancies Act would be reviewed early this year to deliver security of tenure. What have you done in terms of a review, and when can people expect to see change?
One of the first things I did on becoming minister was to ask officials to begin work preparing the review of the RTA. I’m expecting that we’ll go public soon with a two month public consultation on how we modernise the tenancy laws in this country. I have to say I really appreciate The Spinoff has been giving this issue attention for some time, it’s a seriously welcome contribution to the public debate about this and raising public awareness.
Insecurity of housing is one of the biggest problems we have. It really has a corrosive effect on peoples quality of life and wellbeing. I’m very aware that with more than half of the population renting now, in the kind of rising housing market that we’ve seen in so many parts of the country in the past few years, it hasn’t been uncommon for renters to move house as often as every few months or every year, while landlords are cashing in.
We just can’t go on like this. We need tenancy laws that encourage more security for tenants, and I think that actually we can make changes that work for landlords too because a lot of good landlords would love to have more settled tenancies. It makes better business sense for them.
Why can’t we follow models of countries like Germany? They have incredibly strong security of tenure.
We’re going to consult on measures that will provide more security and encourage long term tenancy. I look at some of the reforms that have been made in Scotland, and Ireland, in recent years, two countries that have a similar legal jurisdiction to New Zealand, and in some ways quite similar historical backgrounds in terms of tenancy law and approaches to housing tenure. Also the state of Victoria in Australia, the Labor government there has announced a package of measures that we’re going to take a strong look at as well. I know that Jo Nunweek who’s based in Melbourne did a piece on The Spinoff recently on the subject.
I was going to mention that. The reporting that we did earlier this year found that landlords in Wellington were effectively encouraging bidding wars to secure their properties. In Victoria, which you just brought up, they’ve actively banned apps that facilitate the process. Where do you stand on that?
Our review is going to look at that, and I thought Jo Nunweek’s idea about how to deal with it is certainly something we should take a serious look at.
One other thing that cropped up in Wellington was the increase in student allowance being immediately swallowed by at least some landlords, which again raised rent across the board meaning that other properties could then be raised legally. What is your response to that? It seems like a cynical move.
We looked at that and the data does not support the idea that the increase in student allowance stimulated an increase in rent. There’s a very particular thing that’s going on in Wellington. There’s a shortage of supply, there’s a great deal of pressure on the rental market in the central city, particularly with students who want to be close to university, and so many tenancy agreements are on a 12 month tenancy, which terminates at the end of the year, and so you get this annual cycle of increases and this year I think the increase in rent was I think 9.4%, and it was 9.1% at the same time the previous summer when there was no increase in student allowance. I think there’s anecdotal indications around landlords bumping up rent, but actually I don’t think the facts support that to be honest.
Regardless of the success of programs like Kiwibuild and the developments you announced today, it seems likely that people of my generation are going to remain tenants for at least the forseeable future. What expectations should they – we – have in regards to improvements in our quality of life under the current government?
It’s a priority in our housing policy to make life better for renters, and the healthy homes guarantee is the first step. We want to make sure all rentals are dry, and the review of the RTA is an opportunity for us to moderninse the tenancy laws. Labour campaigned on the policy of for example getting rid of no cause terminations, 90 day terminations, so we’ll look at that in the review. I don’t know what other area of contract law where one party can terminate the contract without being required to justify it or to have good cause.
It’s quite the imbalance.
Yeah, it is. So we’ll put that out to public consultation. I noticed that in Scotland they’ve got rid of fixed term tenancies, so that any tenancy is assumed to be open ended, and can only be terminated by the landlord with one of a number of prescribed reasons. That would certainly increase security of tenure. That’s something we’ll consider and put out for public consultation and get feedback on. Our manifesto policy was also to double the notice period, so the current 42 day notice period for termination, we want to push that out to 90, to give tenants more time to find a place to live.
I’m really conscious that if we are to get rid of no-clause terminations, we also have to take into account the need for landlords to deal in a timely way with rogue tenants who trash the joint or have consistently anti-social behaviour towards neighbours, that don’t pay the rent, all of those things that are intolerable for landlords, who rightly want to be able to protect their assets. If we want to get rid of no cause terminations we have to work very closely with landlords to find ways that they’re able to get rid of rogue tenants.
Another manifesto policy is to get rid of letting fees. It’s certainly my view that its unjustifiable to be charging tenants hefty fees when letting agencies actually work for the landlords. That’s something that we’ll include in the consultation process during the review of the RTA. I know that if you ban letting fees those costs will be passed on and ultimately they’ll end up being added to rent to some extent, but the point about letting fees for tenants is that they come at the worst possible moment when you’re being expected to find bond and rent in advance and so on.
I think that it’s not only the stress and anxiety that constant moving and transience places on renters, particularly families and children, but the financial cost of moving every year or every couple of years is huge and serves to keep people poor. People who aspire to be homeowners are really going to struggle to save up money for a deposit on a house.
There’s a fantastic cartoon in The Spinoff last week about that very subject. Is it the government’s opinion that we may need a shift in whether people should aspire to be homeowners at all? It’s so hardwired into the Kiwi mentality that the end goal is always home ownership, but with different laws around security of tenure and so on, is it reasonable to expect that enough of the population shifts their goals away from home ownership? And either way, should we be optimistic going forward?
One way to look at this is that the really important, high-level goals of our policy should be that people have affordable access to good quality housing. That people have decent housing choices that will give them the kind of housing they want in the places they want at prices they can afford. Part of having good choices is security of tenure. We know that that is what’s really important and what makes the difference.
It goes without saying that one of the great things about owning your own home is the security it gives you. One of the great things about being a state house tenant is the security that you have relative to what tenants have in the private rental market. There are a number of ways that we can achieve those goals, and modifying the tenancy laws and making life better for renters is definitely part of that.
This government is not about to give up on home ownership. We think it has enormous benefits not only through security of tenure but as an opportunity to build an asset over a lifetime and accumulate capital, which can then be used to start a small business, to pass onto your children, to fund your retirement. Over the last 50 or 60 years in New Zealand, home ownership played a really important role in giving generations of working class families in this country the opportunity to get ahead, not only by giving them security of tenure and a place to raise a family but also an opportunity to build an asset.
The flipside of that is that the housing crisis and the falling rate of homeownership is the biggest driver of inequality in New Zealand today, but I’m not at all fatalistic about this. I’m optimistic that with the right policies, with Kiwibuild and the Urban Development Authority, with the housing commission, to drive large scale urban development projects, more investment in rapid transit in our cities, reforming the rental market, more state housing, all these things will allow us to turn this crisis around and not only arrest the falling rate of home ownership and start to build it again, but to give a new generation of Kiwis access to decent, affordable houses.
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