Tuesday 19 November 2019

Really protecting tenants

The government is making it harder for landlords to evict tenants, among a few other changes to the Residential Tenancies Act. 

It's a brilliant bit of politics. 

Suppose that successive governments have so screwed up the rules around getting new housing built and the incentives facing councils to consent new housing that we wound up with a housing shortage. 

Suppose further that your government got elected on a promise to fix the mess - but has achieved close to nothing on the file after two years with an election coming. Kiwibuild was never going to work, and wound up being a costly distraction from the real supply issues at play.

And suppose further that you really need anger about broken housing markets to be directed away from the government. 

What better play than changes to the Residential Tenancies Act? You get a lovely set piece then where landlords yell about the changes, and everybody who's mad about the status quo gets to blame landlords for the mess rather than sheeting that blame home to where it belongs. 

Of course it won't do much to protect tenants. It's palliative. When Auckland is deep in a housing shortage, it doesn't really matter how you fiddle with the Residential Tenancies Act. It's all second-order stuff. 

If you really care about protecting tenants, you need to have massive increases in housing supply. You need to have landlords competing for tenants. You need to have the run-down, damp, grotty dungers left vacant because people have other places that they can afford to live instead. When you're in a massive housing shortage and the alternative to a crappy house is a garage or a car, crappy houses get rented out. If we instead had a surplus of housing, those places would be left vacant and their owners would have to decide whether to refurbish or tear down. 

If you look over at the car leasing market, the provisions in standard lease agreements are way more friendly to the car's owner than are the provisions in house rental agreements. But consumers don't get shafted in those markets because there's ample competition among suppliers and it's easy to set up shop and import more cars if the others are doing a poor job. Like, if the only cars available for lease here were 30 year old Holdens with holes in the roof and a heater that would only work if you held your knee against the centre console just right - somebody would make a buck by opening a new company leasing better cars. 

But importing a car is pretty easy. If you want to build a new house, there are years of process. Auckland Council will make you hold everything up while deciding on street names FFS. We don't make car dealers hold the cars at the port until they've come up with unique names for each car that are culturally sensitive and have passed community consultation, but we hold up housing supply for it. 

I go through all of that over in my Newsroom Pro column this week. Well, not the political conspiracy theory part of it. I expect that the Prime Minister sincerely believes that this will help. And parts of it might. It could just be convenient coincidence that it gives them a nice set piece for landlords and tenants to yell at each other rather than noticing the lack of action on the substantial housing shortage. 

A snippet:
Charles Dickens quipped that an annual income of twenty pounds would result in happiness if annual expenditure were six pence less than twenty pounds, but misery if expenditures were instead six pence over twenty pounds.

Housing is a bit like that.

If we had 600,000 dwellings in Auckland and some 580,000 households needing housing, the result would be happiness. Instead we have about 540,000 dwellings and 580,000 households needing housing, and the result is obviously miserable.

...Tenancy regulation will not build more houses. It can only address some of the current symptoms of a fundamentally broken housing market.

Worse, it is the kind of move that makes the most sense if the Government is pessimistic about its chances of fixing the real underlying problem – making it easier to get new housing built.
Those numbers are a bit rough. The household estimate comes out of the 2013 Census because I've not seen yet any release of TA-level household counts from the 2018 Census - I used the 2013 midpoint estimate which I expects lowballs things. But the number of dwellings count is current.  

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