A Wellington property investor says the Green Party’s proposal to add a cap on rent price rises is a “very dangerous idea”.
Wellington property investor Steve Goodey told AM on Monday rent controls would reduce the supply of rental properties.
“It just hasn’t worked anywhere else in the world.”
It comes after the Green Party announced on Sunday they would implement a renters’ rights bill, and build thousands of new public homes in urban centres where people want to live, rather than endless urban sprawl.
They proposed a three percent annual limit on rent rises, and would also enable developers to build apartment/unit buildings one-third higher than planning rules allow.
Goodey said the “uncomfortable truth” is real estate is a user-pays system in Aotearoa.
“Every time we have government controls and interventions that cost landlords more money to provide real estate to the market, it’s the user that ends up paying – the tenants,” Goodey said
AM host Ryan Bridge asked Goodey if the policy would shrink the pool of rental properties available, to which he replied there’s no concrete evidence for it.
“There’s no real numbers there, a lot of people overplay this.”
Despite that, he thinks property investors who can no longer afford to own their assets will sell up if a Labour-Greens coalition were reelected.
“There will be a lot of people on the plane to Australia. I just think it’s a gift for the Australian real estate market,” he told AM.
But it could benefit one group.
“It might be a small boom for first home buyers,” Goodey said.
But Goodey said recent data showed many landlords are making a loss on their properties at sale, which could affect rents.
“There’s going to have to be rent increases to cover this stuff,” he told AM.
According to the Ministry of Housing and Urban Development, the lack of affordable housing in Aotearoa is primarily due to “restrictive planning rules which limit the heights and density of housing in residential areas”.
The Greens said their policy would ensure rents remain affordable, and that homes were warm, dry, and healthy to live in.
“We want to bring a more three-dimensional approach to that – why don’t we do high density well in the places where people live already,” co-leader James Shaw told Newshub Nation Saturday.
It would introduce the ‘Renters Rights Bill’ in its first 100 days if elected.
“The rental market more closely resembles a game of monopoly than a public good – and it is landlords who hold all the cards,” Greens co-leader Marama Davidson said Sunday
Goodey said he supports the Healthy Homes Standards but with caveats.
“Private landlords have to get their homes up to healthy homes standards, but the government at this stage has given themselves a pass on that one.”
The Standards require all private rentals to meet minimum heating, insulation, ventilation, and drainage requirements by July 2025 at the latest.
The Greens also proposed a Rental Warrant of Fitness, and a new national register of landlords and property managers to track owners and rents over time.
But Goodey argued there’s too much compliance already.
“I’ve got a lot of tenancies where my clients are somewhat at risk, and I don’t want to increase rents on them and make someone homeless.”
In Scotland, temporary rental caps were introduced in September last year to help deal with the cost of living crisis there – and have since been extended.
About 37 percent of households in Scotland are renting – a similar amount to Aotearoa at 35.5 percent.
That’s our lowest homeownership rate in more than 70 years, according to Statistics NZ/Tatauranga Aotearoa
Private landlords own 85 percent of the rental market, with the rest being Kāinga Ora public housing and Community Housing.