Do we have a ‘human rights crisis’ in housing?

Every so often a report gets released claiming to have "the answers" to the problems besetting the New Zealand housing market – which is no easy feat given that there’s actually no agreement among economists and commentators as to what those problems actually are. But the authors of such reports generally don’t allow this small detail to deter them – they simply use their own pet definition as their starting point and go from there!

Two such reports were recently released, one from London-based Dr Jenny McArthur from the Helen Clark Foundation and the other from a UN bureaucrat named Leilani Farha with the rather grand sounding title of UN Special Rapporteur on adequate housing. Each report took a slightly different slant on the nature of the problem, with the Clark Foundation defining it as rising house prices and the UN apparatchik much more colourfully defining it as the "gutting of social housing and a speculative housing market".

Frankly, there was little of any real value in either report. Both prescribed that old favourite of the left, a capital gains tax on investors, with the Clark Foundation also calling for limitations on how much ‘the rich’ could borrow and the UN talking head demanding a rent freeze and an audit of empty homes and describing her self-defined problem as a "human rights crisis". Frankly, this latter claim is claptrap.

While Article 25 of the UN Declaration of Human Rights does refer to the right to adequate housing, New Zealand has a proud tradition of social housing and is hardly ignoring the current problem. Having a self-righteous bureaucrat preaching to us about social housing while her organisation ignores gross violations of real human rights in other parts of the world deserves only our contempt.

But do any of those ideas have merit? Not really. Whatever your view on capital gains taxes, that particular policy idea is dead for at least a decade. Rent freezes have been tried in many places around the world and invariably fail after causing perverse outcomes which end up damaging the rental market. And the concept of ‘forcing’ people to open their empty homes strikes at the heart of our democratic rights and values and would never be tolerated by Kiwis.

It’s also telling that the consistent and tired theme of both reports is the nonsensical idea that property investors are somehow responsible for all of the ills of the property market, which is why the proposed solutions focus on curtailing the activity of that group. This view, which is borne of envy rather than economic pragmatism, isn’t just naïve, it’s dangerous. If any Government was ever stupid enough to implement such ideas the damage they would do to the rental market would be incalculable.

Here’s why:

Around 40 per cent of Kiwis live in rental accommodation. While this percentage has been consistent over several census periods, the demand, in real numbers, is increasing because the population of the country is increasing and because our occupancy per dwelling numbers have been dropping (which means fewer people live in a Kiwi home than they did 20 years ago so we need more homes to keep pace).

To house these people we rely, overwhelmingly, on the private rental sector. There are around 525,000 rentals in New Zealand of which around 65,000 are owned by Housing New Zealand, 12,000 are owned by councils around the country, and another 8,000 are owned by non-government social housing organisations. The remainder – around 440,000 rental homes – are provided by the private sector, mostly mum and dad property investors who have, collectively, saved the country tens of billions of dollars over the past 40 years.

So let me be really clear, lest the point be missed: if private investors don’t provide rental housing, that responsibility falls back on the state, which means you and I, as taxpayers, would have to pick up the bill. For this reason alone landlords should be celebrated, incentivised and listened to – not demonised, attacked and blamed by those whose understanding of the property market extends little further than postcard solutions and sensational headlines.

The New Zealand property market isn’t perfect, but its problems aren’t the result of capital gains, property investment or empty houses. For the 60-ish percent of Kiwis who home their own home, capital growth is the path by which they are able to buy businesses, travel, educate their kids, and ultimately, reduce their burden on the state.

Solving the problems of the market aren’t about punishing this group, they’re about doing everything we can to help the other 40 per cent to be home owners as well.

- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for OneRoof.co.nz. Email him at [email protected]