Election 2023: Green Party wants rent increases limited to 3pc a year

Green co-leaders Marama Davidson and James Shaw launched the party's housing policy today. Photo / Alex Burton

The Green Party says there should be a limit on how much landlords can increase rents every year, and wants a national register for all property owners to monitor compliance with rent controls.

That limit should be 3 per cent a year, or when wage growth or inflation is lower than 3 per cent, the limit should be tied to either the inflation rate, or the average wage increase minus 1 per cent - whichever is lower.

The maximum increase would apply to new tenancy agreements too, stopping landlords from overly increasing rent prices when new tenants move in.

Co-leaders Marama Davidson and James Shaw launched the party’s housing policy in Wellington this morning, which they said was the second plank of a bid to end poverty following their wish for a minimum level of income, funded by a wealth tax.

“Over the past 10 years, while wages have increased about 20 per cent, rents have increased 50 per cent. It’s simply unaffordable, creating massive hardship,” Davidson said.

She said many landlords treated their tenants fairly, but regulation was needed for those who didn’t.

The housing policy aims to swing the power pendulum further from landlords and towards the 1.4 million people who rent.

Opponents of rent controls say that affordability is more an issue of supply and demand, and controls can contribute to dampening supply.

“Overseas experience shows that stringent enforcement of rent control results in largely adverse outcomes such as undersupply, long waiting lists for tenancies, black market activity, little maintenance of rental properties, urban decay, and sometimes even eventual abandonment of such buildings,” said NZ Property Investors’ Federation vice-president Peter Lewis.

”This proposal ignores the current law that restricts landlords to only charging a rent that is commensurate with other rents for a similar property within the area, and that tenants have the statutory right to appeal to Tenancy Services if they feel that their rents are unreasonably high.”

According to Stats NZ, in the year to 2022, a quarter of renters spent more than 40 per cent of their disposable income on housing, compared to one in five households that were paying a mortgage.

During the last 15 years, average weekly rent payments rose 93 per cent, almost twice the rate of mortgage payments (48.8 per cent). Average weekly rents for the June 2022 year were $410.90, compared with $475.40 for average weekly mortgage payments.

A Government-commissioned survey last year said found that 57 per cent of landlords had not increased rent prices in the past year; under new laws, rent cannot be hiked more than once a year. Almost a third said rents had gone up due to the costs of the Government’s healthy homes regulations, which enforce minimum quality standards around heating, insulation, ventilation, and dryness; 26 per cent cited tenancy law changes enacted in 2020 that prohibited ending a periodic tenancy without reason.

Landlords would also face further compliance costs - with a rental warrant of fitness, costing about $200 - under the Greens’ policy. The WoF would fall on landlords and would be a better way to ensure a healthy home than the Healthy Homes Standards, which falls on renters to take landlords to the Tenancy Tribunal if their home isn’t up to scratch.

“The current approach to enforcing and collecting data on compliance with the Healthy Homes Standards is minimal,” the Greens’ policy document says. “In the year to May 2023, Tenancy Services undertook less than one investigation for every 500 rentals. Of these, approximately 53 per cent were identified as having breached the Healthy Homes Standards.”

The Greens want to extend the standards so the 18 degree heating requirement would apply to bedrooms as well as living areas.

To ensure compliance, the Greens propose a national landlord register to keep track of how many properties are rented, who owns them, how much rent is charged over time, and compliance with the rental WoF.

The Greens also propose allowing more storeys to be added to buildings that pass energy efficiency standards and are accessible to the disabled. This comes as the bi-partisan agreement between National and Labour to increase housing density collapsed.

Other key parts of the housing policy include:

• $325m a year to extend the income-related rent subsidy (so renters pay no more than a quarter of their income on rent) to all council housing, 2000 additional community housing provider homes and 6000 additional Kāinga Ora homes
• $50m a year for Māori housing
• $100m a year for support wrap-around services, emergency and transitional housing to end homelessness
• $400m over five years for a government-backed underwrite for community providers building new rental homes
• 35,000 new homes over five years - at a cost of $13 billion - to clear the public housing wait list, which currently sits at nearly 25,000

The party wants to introduce a new bill within the first 100 days of the new government to affect many of these changes. Shaw said the housing policy was a priority, but the party’s ability to put it in place in a future coalition government depended on how many Green ministers might be sitting at the Cabinet table.

“For decades, we have normalised a standard of housing in Aotearoa that is so bad it puts people’s health at risk,” Shaw said.

“Thousands of children are admitted to hospital each year for respiratory illnesses from living in damp, mouldy homes. Any party that stops short of promising to make everyone’s home healthy and affordable, is actively choosing to make life harder for thousands of people.”