Tuesday, 8 September 2020

Real rent control

My column in this week's Stuff papers: in praise of real rent control.

A snippet:

It’s too easy to see rental markets as a bit of a war between landlords and tenants, with landlords conspiring with each other to keep rents high and tenants pushing back through legislation restricting landlords.

Instead, landlords compete against each other for tenants, and tenants compete against each other for houses. When houses are in short supply, that process greatly benefits existing landlords; when houses are abundant, tenants do well.

But few places in New Zealand have abundant housing. After painful post-earthquake housing shortages, Christchurch became New Zealand’s most affordable major urban housing market.

In Auckland, buying the median house costs over nine times the median household income.

In Wellington and Hamilton, the median house goes for just under seven times the median household income. In Christchurch, the median house costs just over five times the median household income.

Internationally, a median multiple of five is considered unaffordable, but we’ll take what we can get.

...

Real rent control doesn’t mean legislated restrictions on what landlords are allowed to charge. Real rent control, and real tenant protection, instead means allowing such a flood of new housing on to the market that the “heritage” houses that are barely fit for livestock would never be able to attract a tenant without substantial remediation.

It means getting rid of the barriers to building housing in places where people want to live.

It means letting developers’ expectations about what tenants might want drive decisions, rather than letting city councillors forbid anything that they cannot imagine anyone wanting – like housing that doesn’t have a carpark, or smaller apartments, or tiny houses, or apartments without balconies.

And it means recognising that every new dwelling that gets built makes all landlords compete just a little bit harder against each other for tenants – even expensive new apartments. People moving into new apartments leave another house open for someone else, and otherwise would have been competing with other tenants for other existing houses.

I quoted Assar Lindbeck in the column; I hadn't known that he'd died around the time I'd filed it. Damn.  

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