In places like Aotearoa where there are not enough homes, renters are often faced with a “take what you can get” situation, knowing that most landlords will easily be able to find other tenants. Reasonable rent rules are fundamentally about reducing the power imbalance between people who need to rent a home and those who own properties as investment assets.
Rising rents are often driven by a particular neighbourhood becoming more desirable, or an overall shortage of housing – not because of anything specific to an individual property. For older rental properties, the costs of building the home will have been paid off long ago, and its overall capital value will have risen on the back of rising land values.
Rent regulation can also reduce the incentives for short-term, profit-driven property speculation. This can help level the playing field for non-profit, community-based, papakāinga, and build-to-rent housing developments, undertaken by people who are in it for the long-term to provide stable, secure tenancies. Rent regulation can provide long-term investors with a good way of predicting their long term returns.
Many more rental properties need to be built. These should be a mix of state homes, homes built by non-profit community housing providers, papakāinga housing, and private rentals. After decades of Governments running down and selling off the state housing stock, the Government is now building more state homes than any Government has since the 1970s. However, building takes time and by itself, it won’t solve the immediate affordability problems that people who rent are facing.